What is dealer holdback?

Holdback is an amount, typically a small percentage of MSRP or invoice, that the manufacturer pays back to the dealer after a new vehicle is sold. It helps cover the dealer's costs of carrying inventory and means invoice price isn't the dealer's true cost. Holdback programs vary by brand and aren't usually something buyers can negotiate directly, but knowing it exists explains why some dealers can sell near or slightly below invoice and still make money.