Do Dealership Employees Get Discounts in 2023

By ROYAL FURY

One of the most popular perks offered to employees at car dealerships is the ability to purchase vehicles for personal use at discounted prices. Dealership employee pricing programs provide staff the opportunity to buy vehicles direct from the dealer inventory at levels below retail pricing.

However, the details and policies surrounding these new and used car purchase discounts vary between dealership groups. Some offer clearly defined pricing while others handle more informally on a case-by-case basis.

Let’s examine how dealership employee auto discounts work and what workers can expect:

Do All Dealerships Offer Employee Vehicle Discounts?

Not every car dealership provides an official employee pricing program. However, the majority do offer some level of discounts or accommodations for staff purchasing vehicles. Here are some general guidelines:

  • Larger dealership groups and franchised new car dealers are more likely to have formal written employee pricing policies. Corporate programs may cover discounts across all their stores.
  • Independent used car dealers and smaller lots tend to handle employee deals more informally. Discounts are provided at management discretion rather than an official policy.
  • Dealers representing certain manufacturers may be required to offer employee pricing based on branded programs dictated by the automaker.
  • Franchised new car stores tend to offer better discounts on brand new cars than used car stores provide on pre-owned models.

While not universal, most medium and large dealerships offer employee pricing while smaller independent lots negotiate informal discounts as needed. Workers should verify their employer’s specific policies.

How Much Are New Car Employee Discounts?

Luxury Brands: Around 3-7% is typical for upscale makes like Lexus, BMW, Mercedes-Benz, etc. Some luxury brands offer no employee discounts. Import Brands: Brands like Honda, Subaru, VW, etc. tend to offer discounts in the 4-8% range on new vehicles.

Mass Market Brands: High volume mainstream brands often offer the highest discounts of 8-12% or more. These include Ford, Toyota, GM, Nissan and others. American Brands: Companies like Ford, GM, and Chrysler offer deals around 6-8% off MSRP for employees.

In addition to the percentage discounts, dealers may waive documentation fees, title transfer fees, sales taxes, or other costs for employee deals. Always verify current policy.

How Much Are New Car Employee Discounts?
How Much Are New Car Employee Discounts?

Used Car Discount Amounts

Employees can also take advantage of used car discounts at many dealerships. However, used vehicle discounts tend to be smaller than on new cars:

  • Franchise Dealers: May offer staff discounts of 4-8% off retail pricing on used makes they are franchised to sell.
  • Independent Used Lots: Smaller lots may provide more informal used car discounts around 2-5% for employees.
  • Rental Cars: Dealers with access to ex-rentals may provide 5-10% discounts on those models to staff.
  • Off-Make Vehicles: Discounts on used vehicles of brands the dealer is not franchised for may be smaller or prohibited.

State/local taxes and fees are typically still paid by employees on used cars. Verify policy.

Do Employees Get Wholesale Pricing?

A common misconception is that dealership staff can buy cars at pure wholesale prices. In reality, while employees get reduced prices, they are rarely equivalent to true wholesale cost:

Wholesale prices represent the dealer’s rock-bottom cost basis on used units. They must sell at higher margins above wholesale to profit. Dealer invoice prices on new cars still involve holdbacks and incentives that mean real cost is higher than invoice.

Most employee deals offer discounts from retail pricing rather than wholesale pricing. Larger dealers may come closer to true wholesale costs on some models. Smaller independent lots can’t afford to sell at or below wholesale, even to employees.

Are There Limits on Employee Deals?

To prevent abuse of programs, dealerships often place limits or conditions on employee offer usage:

Annual caps may restrict the number of discounted purchases annually, such as one new car and one used car per year. Minimum tenure requirements could apply, such as being with the company for 6-12 months before discount eligibility starts.

Employees may need approval for each purchase rather than discounts being automatically applied. Limits on sponsoring family member purchases may exist. Vehicles may be for personal use only, not resale. Some brands prohibit purchase on certain rare vehicles or trim configurations.

Are There Limits On Employee Deals?
Are There Limits on Employee Deals?

How Do Discounts Impact Dealer Profits?

Selling units at reduced prices to employees impacts dealership profits on those deals. However, dealers carefully manage the impact through approaches like:

  • Limiting the maximum number of discounted employee purchases annually through caps. Negotiating some payment of normal fees on employee deals.
  • Earning backend profit if employees finance through the dealer and purchase add-ons. Strategically using employee deals on slower selling models.
  • Making up reduced margins through higher profits on regular retail customer sales.

The goal is sustaining overall dealership profitability while judiciously offering staff discounts.

Do Friends/Family of Employees Get Discounts?

Whether vehicle discounts extend to family and friends depends on the dealer. Here are some common approaches:

Larger dealers may allow immediate family members like spouses and children to use employee pricing. More distant relatives and friends seldom qualify. Case-by-case exceptions may be made.

Purchases must be coordinated through the sponsoring employee. Independent dealers are less likely to extend discounts to family and friends. Limits often exist on how frequently an employee can sponsor sales to others.

Do Friends/Family Of Employees Get Discounts?

Are Parts and Service Discounts Available?

Many dealers offer employees breaks on parts and services for their personal vehicles:

  • Discounted or free routine maintenance services.
  • 10-15% discounts off regular retail parts prices through the parts department.
  • Free shuttle services for vehicles being serviced.
  • Priority service scheduling for employee vehicles.
  • Discounted detailing services.
  • Access to discounted loaner vehicles.

These types of added perks enhance the value of working for a dealership.

How Do Employees Get the Best Deals?

Employees can maximize their available purchase discounts by:

  • Researching full policy details to avoid misunderstandings.
  • Finding optimal vehicles combining maximum retail value with highest discounts.
  • Comparing discount levels across all trims and models.
  • Tracking down scarce hot models for extra savings.
  • Stacking discounts with other current retail incentives.
  • Negotiating added price reductions with management.
  • Identifying clearance models with stacked discounts.

Understanding the process allows employees to fully capitalize on this significant job benefit.

How Do Employees Get The Best Deals?

Do Ex-Employees Keep Getting Discounts?

Vehicle discounts generally cease active eligibility once an individual leaves employment with the dealership. However:

  • Retirees may retain discounts under formal retiree policies. Former employees who left on good terms after long tenure may request one-time courtesy discounts.
  • Discounts do not continue indefinitely. Short time limits apply to any extensions after separation.
  • Disgruntled former employees terminated for cause will not retain discounts.

Losing the employee pricing is an unfortunate reality upon separation. Prudent budgeting is recommended for any future vehicle needs.

Are Vehicle Discounts Taxable?

An advantage on taxes is that discounted prices paid by employees are generally not treated as taxable income:

  • Discounts off retail pricing do not count as “imputed income” for federal or state tax purposes.
  • Sales taxes are still owed based on the discounted transaction price.
  • In extremely rare cases where vehicles are provided 100% free, taxes could apply.

One less concern for employees is getting hit with extra income taxes on their dealership vehicle purchases. Only standard sales taxes apply on the discounted prices paid.

Is an Employee Deal Better Than Shopping Around?

Rather than automatically using employee pricing, it pays to compare against other shopping options:

For common vehicles with high retail supply, shopping multiple dealers may beat employee discounts from your store. Certified pre-owned pricing could offer better savings than employee used discounts at some stores.

Competitor sales with aggressive incentives may undercut employee new car deals. For rare vehicles in tight supply, employee deals provide strong advantages.

While employee pricing provides solid savings opportunities, shopping around could still pay off in many situations based on market factors.

Is An Employee Deal Better Than Shopping Around?
Is an Employee Deal Better Than Shopping Around?

Which Brands Offer the Best Employee Deals?

Certain brands that tend to offer higher employee discounts include:

  • Ford: Extensive employee discounts of 10% or more off MSRP across vehicles.
  • General Motors: GM offers decent discounts to employees, often 8-10% on Chevy, GMC, Buick, etc.
  • Toyota: Known for consistently good new car employee pricing of 6-8% off MSRP across models.
  • Nissan: Nissan dealers often provide higher than average discounts of 8-10% off MSRP to employees.
  • Hyundai: Hyundai traditionally offers some of the most aggressive employee pricing at 10% or greater discounts.

Doing research to find brands and dealers with the best discounts pays off for employees. Policies are not uniform everywhere.

FAQs

Do dealerships give discounts to employees?

Dealerships typically offer discounts to employees as an employee benefit. The amount of the discount can vary by dealership and manufacturer. Discounts may apply to new vehicles, used vehicles, parts, and service. The discounts are intended to help attract and retain employees. Some dealerships restrict the discounts to only certain models or trim levels. There may also be limits on how frequently an employee can use the discount.

How much do GM employees get off new cars?

GM employees get supplier pricing on new vehicles, which is typically 1-2% below invoice price. This discount level used to be called employee pricing and was opened up to the general public for promotional periods. Now it is a standard discount for employees. The discount applies to almost all GM brands and models with a few exceptions for very high demand vehicles.

Does GM still have employee pricing?

Yes, GM still offers employee pricing to its employees and eligible family members. The discount was previously marketed to the public but is now restricted to employees, retirees, and household family members. The pricing is effectively supplier/invoice pricing, giving employees access to dealer cost prices on most models. Some very high demand models may have restrictions.

Who is considered family for the GM discount?

For the GM employee discount, household family members are considered eligible. This includes spouses, children, parents, and other immediate family living in the employee’s residence. Proof of residence may be required. Extended family like aunts, uncles, or cousins would not qualify unless they live with the employee. There are strict limits to avoid abuse of the discount program.

Do all dealerships offer employee discounts?

Most larger franchise dealers offer discounts, but some smaller independent dealers may handle informally case-by-case. Employees should verify policies.

How much are new car employee discounts?

Typical new car discounts range from 3-12% off MSRP depending on brand. Luxury brands generally offer smaller discounts than high-volume mainstream brands.

What discounts are available on used cars?

Used car employee discounts tend to be smaller than new, in the 2-8% off retail range. Franchise dealers offer better used discounts than independent lots.

Conclusion

In summary, most car dealerships offer employee auto purchase programs with significant discounts off MSRP and retail pricing. However, program details vary greatly.

Employees should research policies at their specific dealer to understand available pricing discounts and any conditions or restrictions. With proper planning, workers can maximize savings on personal vehicle purchases as part of their compensation. But diligence is required to get the best deals.

Passionate about the art of blogging and SEO. Dedicated to creating engaging content that resonates with readers while optimizing for search engines. Bringing knowledge and creativity to drive online success

Leave a Comment