MSRP.
The latest social media slang it’s not.
The manufacturer’s suggested retail price (MSRP), is the window sticker price that often is the first thing at which new-vehicle shoppers look – after color, of course.
It’s one of several prices shoppers need to consider when searching for a new vehicle, along with the dealer invoice price, the amount paid by a dealer to the vehicle manufacturers, and the market price, the amount buyers are paying for a new vehicle in a particular area.
Often, the buyer’s question is: Should I pay the MSRP? The answer is a definite maybe not.
“The key point to remember is that the MSRP is only a suggested price for the new car, truck, crossover, SUV or minivan,” wrote Suzanne Kane at The Car Connection online. “The automobile manufacturer cannot set the price that dealers sell vehicles for. They can only suggest such prices.”
The MSRP includes a car’s standard equipment plus any factory-installed options, as well as any dealer-installed options, preparation fees and markup. MSRP does not include any optional equipment or destination charges, which is the cost of transporting the car to the dealership. These extra costs are usually listed separately on the sticker. Taxes and registration fees are not listed.
“If the MSRP is only suggested, and the invoice price is what the dealer pays, where does that leave the consumer?” wondered Kane. “The answer, according to car buying experts, is somewhere in between. You never want to pay the MSRP and you probably won’t be getting away paying invoice price.”
So why would a buyer pay the suggested retail price, or sometimes more, for a new vehicle?
“In some instances where demand is higher than supply, customers actually have been known to pay above the MRSP,” according to Kelley Blue Book in Step 5 of an article “10 Steps to Buying a New Car” at www.kbb.com. “For instance, during their respective launches, the Mazda Miata, Volkswagen Beetle, Chrysler PT Cruiser and Honda Odyssey demanded prices well above MSRP.”
Senior Consumer Advice Editor Philip Reed at Edmunds.com goes a step further in an article subtitled, “How to Know When Full Price is the Right Price.” In the article, Reed describes five different situations in which new-vehicle buyers might expect to pay at or near the sticker price.
But plenty of opportunity still exists for new-vehicle shoppers to seek a price lower than the sticker.
“What you’ll need to find is the market price, which is what others are actually paying for that car in your area,” wrote Trent Looms in an advice column at NewCars.com. “Depending on the popularity of a car, the market price may be higher than MSRP, or even lower than invoice.”
For example, at Kelley Blue Book, a 2014 Ram 1500 Tradesman is listed with an MSRP around $25,295 and a dealer invoice around $23,777, with a “Fair Purchase Price” of $24,728 (range: $23,867-$24,728). Edmunds.com listed the “True Market Value” of the same Ram pickup at $24,026.
Tomorrow, we’ll take a closer look at the dealer invoice prices and what they mean to shoppers.
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