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What is a dealer holdback?

Updated: 12/7/2022
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13y ago

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Back when car companies were first getting started they did not have the money to produce cars and have them sitting around waiting to be purchased by dealers. The would have the dealers pay up front before the car was built. The price they had them pay for the car was more than the cost and when the dealer sold the car they would send them back the overage or hold back. Although dealers no longer have to pay for a car before it is built they still pay more than the car costs. Just like in the beginning when the car is sold the manufacturer will give the dealer back their held money. This is a way for dealers to keep a steady cash flow as long as they are selling cars even if they sell one or two at true cost.

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