Among the various marketing strategies that car dealerships use to attract customers is employee pricing deals. These programs can provide significant savings for consumers on various products, including vehicles. Understanding how employee pricing works can help you maximize your savings and get the best value. This breakdown details everything you need to know about employee pricing, so you can minimize the cost of your new ride.
Key Points
- Employee pricing is a discount applied to the price of a vehicle where eligible buyers pay the same lower price that car company employees can get, often below MSRP.
- Customers can take advantage of significant savings and additional incentives, and can avoid the need to negotiate for the lowest possible price.
- While employee pricing has its perks, it’s not always available, and when it is, it may not apply to all models or to all consumers.
What Is Employee Pricing?
Also referred to as ‘invoice pricing’, employee pricing allows eligible buyers to purchase products at the same cost that company employees would pay, typically at significantly lower retail prices. These discounts are typically negotiated by companies for their employees or offered as promotional offerings by manufacturers.
Invoice Pricing Vs MSRP
There are distinctions between invoice pricing and MSRP:
MSRP
MSRP is short for the ‘Manufacturer’s Suggested Retail Price’. When the manufacturer supplies the vehicle to the dealership, it offers a suggested cost to charge end consumers. The dealership can then choose to go over or below that number in order to incline sales and maximize profits.
MSRP prices are negotiable, though they are consistently higher than invoice pricing.
Invoice Pricing
Invoice pricing is different from many other sales incentives. This strategy involves dealerships charging the end customer the price they paid for the vehicle. It includes things like shipping and handling, though it doesn’t have the extra markup of most dealership listings.
When you hear employee pricing, think invoice pricing. The company isn’t taking a loss, but rather they are using the incentive to try and move product.
Tips On How To Get A Lower Car Price
To make the most of employee pricing, follow these tips.
Know Your Stuff
Before walking into a car dealership, take some time to research the vehicles thoroughly. Find out what the car’s current MSRP is so you can spot a good deal.
You should also get familiar with the car company’s specific employee pricing program, as the exact details can vary from company to company.
Make Sure You’re Eligible
Employee pricing programs are not always necessarily available to just anyone. There are typically eligibility requirements that you must meet. For instance, you may need to work for a company that is affiliated with the car manufacturer to qualify for employee pricing deals.
Verify That The Vehicle You Want Qualifies
Employee pricing is available on various models, but not everyone may be eligible for these programs. For starters, only new vehicles are typically eligible. Further, the manufacturer’s employee pricing discount may only apply to specific models, so make sure the car you want falls under the manufacturer’s umbrella or employee pricing.
Take Advantage Of Financing Deals And Incentives
One great benefit of employee pricing is that dealerships often allow customers to pair it with other deals and incentives. For example, there may be promotional low financing rates available from time to time, which you can take advantage of alongside employee pricing to really maximize your savings. In some cases, you may even be able to find and qualify for 0% APR financing on select models.
Learn more: 0% Car Financing In Canada
Advantages And Disadvantages Of Employee Pricing
Any purchase, particularly when you’ve seized a sale opportunity, comes with its own set of pros and cons. To determine whether you are getting the best rate, at the best possible time, understanding these benefits and pitfalls is critical.
Advantages Of Employee Pricing
There are several perks to employee pricing, including the following:
- Potential Savings: Employee pricing typically offers vehicles at below-market prices compared to the MSRP. This can translate into significant savings.
- No Need To Haggle. Invoice pricing is a final offer kind of deal. So, if you are not a fan of negotiations on the sales floor, or are worried about the stress of haggling, this can be a much easier way to go.
- Potential For Additional Incentives. Some manufacturers allow customers to combine employee pricing with additional promotions and financing deals.
Disadvantages Of Employee Pricing
Along with the benefits of employee pricing are some downsides to this approach, including the following:
- It’s Not Always Available. Employee pricing isn’t available through all car manufacturers; and, when it is an option, it will not be for all makes and models. Basically, if you are gunning for a specific car, there’s no guarantee that it will fall under the scope of the deal.
- Excludes Used Vehicles. You can only use employee pricing on new cars since it is the manufacturer’s price to the dealership being matched. Assuming you are planning on getting a new car, it’s not an issue. However, if pre-owned was on the table, you are likely to save more by going that route.
- No Negotiating Opportunities. As mentioned, employee pricing is typically fixed. While this may simplify the buying process, it also eliminates the ability for you to negotiate a better deal.
Buy Used
Used cars are typically cheaper than new vehicles, so you could save quite a bit of money right off the bat. Plus, you’ll benefit from a slower rate of depreciation on a used car over the first few years, as new cars tend to depreciate very quickly in the first couple of years, as much as 20% to 30% of their value in the first year alone.
Choose A Shorter Loan Term
If you choose to finance a car purchase, consider opting for a shorter loan term. While the monthly payments are higher compared to longer loan terms, you’ll pay significantly less in interest over the life of the loan.
Pay in Cash
If time is on your side, consider saving up as much as you can to make an all-cash vehicle purchase. That way, you won’t have to worry about interest rates and financing fees that would add to the overall cost of your vehicle.
Make a Larger Down Payment
A larger down payment will reduce the loan amount, which can lower your monthly payments and save in interest costs.
Which Companies Offer Employee Pricing?
Many big vehicle manufacturers offer employee pricing incentives from time to time, including the largest names in the industry. Each company takes a different approach to this type of deal.
- Ford Employee Pricing: The Ford Employee Pricing program doesn’t run all the time. But when it does, it offers Ford employees and their families access to discounted prices on new models. Typically, this pricing is set lower than the standard retail price, offering significant savings.
- GM Preferred Pricing: General Motors offers this type of deal under the name of Preferred Pricing. Nearly every new Chevrolet, Buick, GMC or Cadillac vehicle is eligible. To qualify, you must prove that you are with a participating company and access the deal at a participating dealership. If you work with a large corporation, check with your employer to see if it is available.
- FCA Employee Pricing Plus: Also referred to as the Chrysler Advantage Plan, the FCA Employee Pricing Plus plan offers discounts on Chrysler, Dodge, Jeep, and Ram vehicles. Eligible participants in the program include current FCA/Stellantis employees and retirees, affiliates of FCA, and FCA/Stellantis preferred customers.
- Hyundai Invoice Pricing: Hyundai offers employee pricing through its Hyundai VIP Partner Program and Family Program. This pricing program allows employees of affiliate companies to buy new Hyundai vehicles at a discount. It also allows customers to remain qualified for other current rates and incentives.
Is Employee Pricing A Good Deal?
Generally speaking, employee pricing can offer a great deal on a car and significant savings on the purchase. Employee pricing usually provides a major discount off the vehicle’s MSRP, often lowering the price closer to the invoice price, which is what car dealerships pay manufacturers. This can result in potentially hundreds or even thousands of dollars in savings, depending on the vehicle make and model.
Other Ways To Save On A Vehicle Purchase
While employee pricing can be a great way to get a good price on a car, there are other strategies you can use to keep costs as low as possible when buying a vehicle:
Consider Leasing Instead Of Financing
Employee pricing is typically not available on leases, as mentioned. But aside from reducing your vehicle costs by looking for employee pricing, you may consider leasing your car instead of taking out a car loan. Monthly lease payments are usually lower than loan payment amounts. That’s because with a lease, you pay only for the car’s depreciation over the lease term, and not the full purchase price.
Choose The Right Day To Shop
Car sales are time-sensitive, meaning that getting the best deal relies on your picking the perfect moment to buy. Employee pricing is usually in mid or late summer since it is meant to clear the floor of older models. There are other key times to buy, including:
- Year-End: At the end of the calendar year, the dealership is in a mad scramble to make as many sales as possible and to open up space to make room for the new year’s models. As such, they may want to clear out the current year’s inventory. The same is true of the salespeople. Use this to your advantage to get a better rate.
- Month-End: In the world of sales, quotas are a high-stakes matter. If you can catch a dealership or representative who has not yet made their sales for the month, you can apply pressure to get a better rate.
- Off-Season: Certain vehicles may not sell as quickly during certain seasons. For example, not many people shop for a convertible in the middle of winter. But if you do, then you will likely have more negotiating power than during summer. Consider the season that’s appropriate for the type of car you are planning to buy. Aim for the clear opposite time of year to make your purchase.
- Holidays: During holidays such as Black Friday, you may be able to snag a good deal on a car, much like any other type of consumer product.
Final Thoughts
Employee pricing can offer a great opportunity for you to save money on your next vehicle purchase. By understanding the details of each manufacturer’s program and taking advantage of other promotions and incentives available, you can maximize the benefits of employee pricing. If you decide to finance, consider shopping around with different lenders to find the best financing rates by using an online loan comparison platform like Loans Canada.
