diff --git a/lib/ansible/inventory/data.py b/lib/ansible/inventory/data.py
index 72f27fc7d5..e828c1a8d2 100644
--- a/lib/ansible/inventory/data.py
+++ b/lib/ansible/inventory/data.py
@@ -79,6 +79,9 @@ class InventoryData(object):
         else:
             new_host = Host(pattern)
 
+            # use 'all' vars but not part of all group
+            new_host.vars = self.groups['all'].get_vars()
+
             new_host.address = "127.0.0.1"
             new_host.implicit = True
 
diff --git a/lib/ansible/vars/manager.py b/lib/ansible/vars/manager.py
index 741852487f..5c559c8c0f 100644
--- a/lib/ansible/vars/manager.py
+++ b/lib/ansible/vars/manager.py
@@ -334,15 +334,14 @@ class VariableManager:
                     data[group] = combine_vars(data[group], _plugins_play(group))
                 return data
 
-            # Merge groups as per precedence config, if not implicit localhost
+            # Merge groups as per precedence config
             # only allow to call the functions we want exposed
-            if not host.implicit:
-                for entry in C.VARIABLE_PRECEDENCE:
-                    if entry in self._ALLOWED:
-                        display.debug('Calling %s to load vars for %s' % (entry, host.name))
-                        all_vars = combine_vars(all_vars, locals()[entry]())
-                    else:
-                        display.warning('Ignoring unknown variable precedence entry: %s' % (entry))
+            for entry in C.VARIABLE_PRECEDENCE:
+                if entry in self._ALLOWED:
+                    display.debug('Calling %s to load vars for %s' % (entry, host.name))
+                    all_vars = combine_vars(all_vars, locals()[entry]())
+                else:
+                    display.warning('Ignoring unknown variable precedence entry: %s' % (entry))
 
             # host vars, from inventory, inventory adjacent and play adjacent via plugins
             all_vars = combine_vars(all_vars, host.get_vars())