What is dealer holdback and what is it for?
Holdback is an amount (typically 1 to 3 percent of the MSRP) a manufacturer sets aside from a sale and keeps in an account for the dealer. The amount is built into the invoice price, but periodically—usually every three months—accumulated holdback amounts from vehicles sold during the interval are paid back to the dealer. So holdback, in essence, acts as a dealer discount—a refund from the manufacturer that in the end lowers a vehicle’s invoice price. The official purpose of holdback is to ensure that dealers have enough money on hand during the year to pay taxes and other ongoing overhead charges.
