Why can you buy a car at dealer Invoice but audio

I've been in the business 30+ years and Jea48 pretty much has it nailed. There would be a shop on every other corner if selling high end audio was as profitable as some of you think it is. Just not enough volume for a local shop to sell at a lesser profit margin.

BTW although most of the comments made about how car dealers make there money is true but you can not compare there high volume/commodity car business model to any type of specialty retailer. Again the difference is in volume. Just like the cell phone business the profit is not in the phone (as you know they pretty much sell them below cost or give them away) it is in having tens of millions of phones with all those airtime minutes. Or computer printers which manufacturers sell below there cost but make it all back and lots more in the the ink. Do you see audio shops with large service centers running full time (labor is very profitable)? Or selling you some monthly subscription so that your new amp will have it's magical sound quality renewed every thirty days?...So when a car dealer sells at or near cost it's because he wants to get your trade in to sell it at a healthy profit, and supply service for both which is very profitable.

You can't always buy a car at invoice. Even if you do, there are hidden profits in there for the dealer, like factory rebates. Cars are high volume business. An audio dealer doesn't sell many $10K amps. He needs to make more than a few dollars from each one to stay in business.

You won't buy a Ferrari, Porsche, Lamborghini automobile at dealer invoice, nor a BMW or Mercedes for that matter. The cars that sell for deep discounts are akin to the discounted electronics at Best Buy and Fry's. I don't expect big discounts on highend cars or electronics I like. Since I'm not rich, I buy mostly used.

Rhljazz,

You can buy Mercedes C class and E class all day long at Invoice. Ferrari you have to pay sticker and Lamborghini you can get a small discount. You can also wheel and deal on Porsche.

I know very few people will believe this, but I have actual experience in both the auto and high end audio industries, and know how they both work. The audio store is mine and the dealership is my families. Its kind of funny how people seem to know what type of profit margins there are on everything.

If there's one single concept that holds true, not only for the 2 industries mentioned here, but for most others as well is: When you are in business, you never tell anyone what you pay for anything. The minute you do that, you loose. Any time a business owner tells you what their cost is, their almost certainly making it up. In a place like a car dealership where there are a lot of employees and departments, none of those people know anything about what the dealership actually pays for anything. And, yes, if you look at their computer screens, cost is listed. Its nothing more than a made up number or some type of code. Only the owners and the accounts know any of the real pricing.

As far as invoice goes, its a false bottom used to start the sale process with. Its a number on a piece of paper and nothing more. As others have correctly stated, things like rebates are given to the dealers that will lower the actual prices they pay for the car. When a car is sold at invoice, they are making a profit.

In audio, the markup varies. There are some overall pricing trends, but in the end, whatever dealer cost and markup is, is spelled out by the contract you have with the equipment manufacturer. Some companies allow you to discount, while others don't. There are other factors, as well, but they can vary from company to company. I can also tell you that most equipment manufactures won't hesitate to revoke your status as a dealer if you don't follow the terms you both agree to.