- 22
- Nov
The MSRP is an abbreviation for “Manufacturers Suggested Retail Price.” It was started by laws that were enacted to protect the consumer (car buyer) and small businesses like dealerships. Before there was a MSRP price, dealerships were free to charge whatever prices they wanted for cars, and the poor naive car buyer had no idea what the cars on the car lot were actually worth.
…So it would be hard to negotiate a dealer down in price when you didn’t have any idea of what a car actually costs.
But where is the MSRP price? It’s the actual sticker price! But let’s go over some car dealer terms to clarify things a bit:
MSRP price = sticker price. Invoice = Wholesale price of car that the dealer pays to the manufacturer. Holdback = Factory to Dealer Rebates. Basically, you should start your haggling about $2000 below the invoice price.
In the past, dealers put the MSRP price of each car in large letters on the windshields. This was done to advertise to passing traffic. But this has been mostly replaced with a spec sheet on the side windows that also lists the MSRP.
But the MSRP price is not on all of the spec sheets: Some dealers leave it off the spec sheet on purpose of car models that are in high demand, hoping to negotiate the best price possible. Because if they did put the MSRP on the high-demand cars, potential car buyers might immediately expect to pay less than the price the dealership knows the market will bear.
So if a potential customer does ask for the MSRP price, the dealer can now talk about it while hawking various “extras” that the car has. In this way the car salesman can buffalo you into negotiating from a higher starting price.
Note that the MSRP price of a vehicle does not include taxes, registration, transportation to the dealership (“destination charges”) and other miscellaneous fees. Nevertheless, most people expect to get a discount off the MSRP. But when all of the extra charges are added in, the actual final price may be higher than the MSRP. As a matter of fact, dealerships used to set the MSRP prices fairly high, which made you think you were getting a good deal after they’d knock off this inflated amount and offer you the car at some price below the MSRP price.
In recent years, however, the trend has been to set the MSRP closer to the actual market value. So when you add in the destination charge (which is non-negotiable) and other fees, your out-the-door cost will often exceed the MSRP.
The MSRP is (nowadays) a good starting point for negotiating for the best price for your car. It ensures that you will get the same starting point as everyone else – no matter what state you are purchasing the car in. The MSRP ensures a level playing field, while still encouraging free trade.
Have you heard of these huge money-saving car buying tips? Discover these must-have tips and more at buying-new-car.net. Know your rights and options before laying down your hard-earned money!
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