Dealer Holdback

Category: finance

A hidden percentage rebate (usually 2-3% of MSRP) paid by the manufacturer to the dealer after a vehicle is sold.

The dealer holdback is a protected profit stream. Even if a salesperson sells a car at invoice price, the dealer still nets the holdback amount later from the manufacturer. It acts as a safety cushion for dealers, allowing them to offer "below invoice" pricing in competitive end-of-month volume scenarios.

Common Examples

• The general manager approved an aggressive sale below invoice, knowing the dealer holdback would still secure a positive store profit.
• The dealer holdback is not disclosed on the standard buyer order sheet, keeping the true store profitability hidden from the retail consumer.