In this thread over here, a poster asked about regional variations in the cost of a new car. I went to cars.com and searched for base model Honda Civics in a variety of cities. What I found were the following advertised prices for pretty much the same car:
I never thought there would be so much variation between cities for the advertised price of a base Honda Civic!
A few posters commented on why the prices are what they are. Some theories include that cars cost more in areas where there are fewer public transportation options, or that the prices reflected are more indicative of dealers in different areas trying harder to get customers in the door (as opposed to being approximations of true selling prices.)
For the sake of this question, please ignore the issues of the cost of sales/property taxes, insurance, fuel, upgrades, and similar costs of buying and owning a car. I’m just talking about dollars for hardware here - the flyaway cost, if you know that term.
Is there indeed this much variation between how much similar cars sell for in different regions?
If so, does anyone know why? (This being GQ, I’m not interested in speculation.)
Is there another source of data to show the actual price paid for cars in different regions?
if the listings are from dealers in each area, then it’s the price that the dealer thinks is a good starting point for the market it operates in. MSRP (the price on the window sticker) doesn’t vary based on region.
Did you try looking at the price at several dealers in a single large city? I’d wager there’s a difference between the prices of the same new Honda from a dealer in a ritzy golf course suburb versus from the dealer in the grittier part of the old city.
When I bought my Vette last spring I shopped dealers in southeastern Wisconsin and northern Illinois via email, telephone, fax, and personal visits. I shopped for the exact car with the exact features at each dealership, using invoices to assure the vehicles I was negotiating on were identical.
My better deals all came from the Chicago area and I finally bought from a Villa Park, IL dealer. The closest any dealer around here would come to their price was $1300. The features, equipment, color, and rebates were all the same. I simply could not figure it out. Of course I’ll go 80 miles for 1300 bucks.
The manufacturer’s wholesale price is the same to every dealer, no matter where they are located. (Though they do offer volume discounts, rebates, etc. to dealers based on sales.) There is a delivery charge; this does vary by location. But it’s generally listed separately on the window sticker, not part of the base price.
So the differences you see are more likely to be based on the usual factors of competition: general state of car sales in the area, overstock vs. shortage, dealer desperation, loan availability, etc. After all, it’s only about 16% variation – I often see advertisements for sales with bigger discounts than that.
There can also be regional variances in how the “base” cars are equipped. A base car in LA might not have exactly the same equipment as a base car in North Dakota.
The car makers regional office and the local dealer group have some say about how the cars sold in their area are equipped.
Example, cars in the upper Midwest might all come with a cold weather package. Cars in Arizona or So Cal might all come with a hot weather package…
It might be that that the dealers in Wisconsin are the only dealers in a particular geographic area whereas there are a lot of dealers for a particular make in Chicago.
I live in the DC Metro area, and when I bought my last car, I had the option of about four or five dealers per make.
I did some searching to try to find if there was a bias in the location of the dealerships. For areas that I’m familiar with, I didn’t really find a pattern that explained that higher car advertised prices were correlated with the dealers being in downtown areas. (Though I do admit that I’m not doing a rigorous study here!)
For example, the lowest car prices for Honda Civics in the DC area were found in Tysons Corner, which isn’t an urban area but is a very well developed suburb. In Southern California, the lowest advertised prices seemed to be in places like Chatsworth, which I would say is a suburb that isn’t nearly as developed. But, the lowest prices in Chatsworth were several thousand dollars more than those in Tysons Corner.
I have a friend who is a high ranking sales person at a Dodge dealership in Minnesota.
He told me once that the minimum he will sell a car for is $6000 over his cost, so there is one factor.
Another acquaintance delivers cars by the semi load, he told me he figures the minimum it costs to ship the Toyota cars (coming from Portland to Minneaplis) is about $700 a piece. And once in a while a car will be rejected because it got dinged up on the journey.
Shipping is probably a pretty large factor between geographical areas which may account for the $100-$500 difference.
Delivery costs are the same, regardless of location (as I recall). Dealers will tack on advertising costs from 1-3%. Basically, the listed price is whatever the dealer can historically get for his vehicles. A basic 2015 Civic LX (auto) has an invoice of under $18K. Intellichoice says the target price is about $18,400, but I think that’s too high. If history says that locals will pay $2,000 over invoice, then that’s what the dealer will try to sell them for. I don’t know where that website came up with a new Civic price of $16K in WDC, but I don’t believe it.
If you go to cars.com, search for new cars within 30 miles of 20002, input the Civic and hit search. I found three cars listed at $15,990 and some change.
Good prices! Intellichoice used to be consumer friendly, but it seems they’ve maybe jumped into bed with the car industry. Edmunds has become useless, as well.