Tips, Tricks & Trends

Is ‘Employee Pricing’ Really a Good Discount or Just a Scam?

When it comes to car shopping, everyone wants a discount off the advertised price. But having to negotiate to get a good price can be a hassle. Luckily, automakers will generally have sales from time to time that advertise your ability to buy a car at the employee-discounted rate. Admittedly, getting “employee pricing” is a perk when you work for an automotive manufacturer, but are consumers really getting the same discounts as the actual employees?

What is the employee pricing discount?

You may have seen the commercials on television advertising employee pricing discounts on cars from automakers like General Motors, Ford, and Hyundai and wondered if the savings are real. The good news is that they are real, the bad news is that they are not as deep of a discount as you think. We say this because in the dealership world, “employee pricing” means that you get the pay the invoice price, or the price that the dealership allegedly pays for the car.

That’s not to say that it’s a scam, in fact, it’s technically not because they are offering you a pretty good discount. However, with the power of the Internet, anyone will be able to find out pretty quickly that almost any dealership can do much better than just the invoice pricing.

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There are more discounts to be had

If you do a little research online and utilize resources like Truecar, then you’ll soon find out that the dealer’s invoice price is typically about halfway down the iceberg. You’re past the tip, but there are still more savings to be had. The additional savings comes via further incentives provided to the dealer from the manufacturer in order to sell their cars. If the additional discounts aren’t used, then the dealer gets them as a profit.

However, it’s up to you, the consumer, to do your homework and figure how to leverage the extra savings. According to Cars.com, you should always check with at least a few other dealerships and retailers like Costco to ensure that you’re getting the best deal possible. What you’ll typically find is that other dealers are able to give you a lower price because they are actually willing to dip into those extra manufacturer incentives in order to earn your business. Other dealerships might not be willing to do so.

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What do employees actually pay?

According to Ari Janessian, an auto broker for Boston Automotive Consulting, dealership employees can usually purchase cars for well under the invoice pricing. In fact, they usually get the additional manufacturer incentives that can be obtained by the consumers, but they get even deeper discounts than that as well.

I can personally attest to that because I used to work for an Audi dealership where employees were able to lease any car at 1% of the MSRP as their monthly payment and some of the specialty “RS” models like the RS3 and RS5 were usually offered to employees and their families at a 23% discount. That’s an outrageous deal!

So if you want real employee pricing, then, unfortunately, you will have to either get a job at a dealership or marry someone that works at one. Barring that idea, do your homework and get the best price possible.