My understanding was the MSRP for a vehicle was the highest price a dealer could charge for the vehicle. It was usually inflated somewhat, on purpose, and the salesmen would absolutely let you pay full price if you didn’t know better. But you could bargain if you did. Still, the dealer would love to charge you $500 for floor mats or other doodads, and there were those nebulous “dealer prep” fees, but if the sticker said $20,000, then that’s the most you could pay for the vehicle itself.
IIRC the Japanese mfrs got away from that. I seem to recall the Mazda RX7 ads circa 1980 sidestepped it, implying you might get it for a particular price but there weren’t any guarantees. It left the door open to dealers wringing every nickel out of the sales price because after all, there were only so many available and maybe that dealer was allotted one or two.
So recently Mrs. L was saying we sure could use a little truck. I think those new Ford Mavericks look interesting. When I visit dealer websites I will see some vehicles say “MSRP-$25,000. Final price-$30,000.” I don’t think they’re implying that they’ve added $5K worth of upgrades. It seems to say, “You’re going to have to give us $5K over and above MSRP if you want it.”
“Dealers are desperate to generate revenue,” said Sheldon Sandler, who runs a car-dealer consulting service in Princeton, N.J. “You can expect extremely good deals from anyone who can deliver you a car.”
Is this a boomerang effect?
Anybody buying new vehicles these days? What is your experience? Does MSRP mean anything?
Dealers can charge whatever they want.
The new Broncos are selling for 5, 10, even $20K over MSRP. And, that’s not even for flood mats.
As long as someone will buy at a huge markup, dealers will do it.
MSRP is the Manufacturers’ Suggested Retail Price. It has never been the ceiling that a dealer could sell it at, and the practice of selling cars over MSRP did not originate with Japanese sports cars (I think it goes back to at least the original 1964 Pontiac Tempest GTO) although the prices that people would pay above MSRP for the Datsun 240Z and Mazda RX-7 were extraordinary (although given the relatively low price of the cars was still not unreasonable). Dealers are free to charge what the market will bear, and often do for models in high demand.
Exactly this. 22 years ago, I was hot to buy a Chrysler PT Cruiser, when they were a new model. Demand was way above the limited supply, and dealers here in the Chicago area wouldn’t even take orders for them – once they got one on the lot, they’d price it at pretty much whatever they wanted (which was invariably thousands above the MSRP), and they’d instantly have dozens of prospective buyers lined up, happy to pay that price.
I forget but didn’t Saturn car company have a thing where the sticker price was the price? Like buying milk in a supermarket. The listed price is what you pay.
Presumably this was to ease fears of buyers that they would get ripped off.
Yes, that was one of their big points of differentiation.
There are some car dealers in the U.S. today which advertise that they are no-haggle dealers (including some of the online car dealers, like Carvana and Vroom), but they tend towards selling used cars.
Yes, and if you wanted a junky “New GM Way of Doing Things” car it was great. I dated a woman who had a Saturn (she didn’t learn to drive until graduate school and wanted a simple car that was easy to buy and finance, so they hooked her) and that fucking thing would practically burn the passenger’s feet off because they located the heater core right next to the right-hand foot well. I also changed the oil on that car once and only once because it was an enormous pain in the ass (still not as bad as an Audi 4000 but it was in the running).
I actually bought my Tacoma TRD Off-Road from a dealer that only charged MRSP at a time that other nearby dealers were adding $500 of extra equipment and charging thee or four grand over MSRP. Considering the prices and the fact that the same dealership was trying to buy back the truck at the same price so they could sell it for even higher on their used lot, I kind of feel like I got a deal, notwithstanding how utterly reliable it has been despite having been through some pretty aggressive terrain and unmaintained roads. I have a friend who has a FJ Cruiser who could literally sell it for more than it was new despite being north of 100k miles, so why Toyota isn’t building more of those and selling them as a budget alternative to the grossly overpriced Land Cruiser I don’t know. Personally I’ll take an original FJ40 soft top any day even if it is a totally impractical daily driver (that is what the FJ45 three door is for).
We were recently looking to buy and encountered “dealer markup”. The online price was only the starting point. Online it would be, say, $32,500. Once we got in and got the full price quote it would be, say, $41,000.
They would give us a very detailed quote for the full price, broken down into all sorts of line items, one significant one being multiple thousands for “dealer markup”. They were quite proud to point that out to us! They had what can only be described as the dictionary definition of a shit-eating-grin.
We didn’t buy, yet. But we do expect to go through the whole please-god-make-it-stop negotiation ritual soon.
In the United States, the list price is referred to as the manufacturer’s suggested retail price or MSRP.
Under earlier US state Fair Trade statutes, the manufacturer was able to impose a fixed price for items. The fixed prices could offer some price protection to small merchants in competition against larger retail organizations. These were determined to be in restraint of trade. Many manufacturers have adopted MSRP, a price at which the manufacturer suggests the item be priced by a retailer. The term “suggested” can be misleading because in many cases, the MSRP is extremely high compared to the actual wholesale cost, opening the market to “deep discounters”, who are able to sell products substantially below the MSRP but still make a profit.
and
A common use for MSRP can be seen in automobile sales in the United States. Prior to the spread of manufacturer’s suggested retail pricing, there were no defined prices on vehicles, and car dealers were able to impose arbitrary markups, often with prices adjusted to what the salesperson thought the prospective purchaser would be willing to pay for a particular vehicle.
So in the past, they wouldn’t tell you how much the car cost till they got you in the dealership? The MSRP doesn’t seemed to have put an end to arbitrary markups.
They had a segment on the news last night about just this subject. In Chicagoland, virtually every dealership is selling cars for thousands of dollars over sticker price. Some are even seventeen thousand dollars over. Lots are empty in many places. You can order a car, but it will take 6 months for you to get it.
When I bought my Honda H-RV just 14 months ago, I got it for zero interest because they were trying to stimulate sales. The business manager told me that, in the ten years she has been there, it was the first Zero APR sale Honda ever had. I guess I was lucky as hell because I got out of Pompei just before the eruption. LOL
The manufacturers are starting to crack down on the gouging…
About 10% of dealers in Ford’s network charged more than the suggested sticker price last year, the company’s CEO James Farley said on Feb. 3. Farley warned dealers they could potentially receive fewer models. General Motors issued a similar warning to dealers inflating car prices last month. Relationships between automakers and dealers are shifting as GM and Ford compete for customers in a historically tight market.
Yeah, the whole Saturn business model from manufacturing to sales, etc., was an attempt to rethink. But, like so many things, the powers that be just couldn’t, because reasons. So, the line didn’t get the care and feeding it needed to blossom, and died. Ah well.
The current auto market situation is a result of the economics of supply and demand. Due to supply chain issues (most significantly computer chips) and the auto industry decision in 2020 to halt production for 2 months, the supply of new vehicles is significantly below current demand. As a result prices have gone up.
As said earlier, the key thing about MSRP is the “suggested” part. Dealers are not bound by suggested pricing established by manufacturers.
The auto industry like most others has cycles, we are currently in a sellers market. Which is why car commercials and dealer incentives are extremely rare these days. When you see auto advertising and incentives pick back up, you’ll know that we are heading back towards a buyers market.
Read an article about Ford trying to transition to Tesla’s sales model for EVs–no inventory, order online for a fixed price, etc. The dealers will probably have a conniption, but it would sure influence me.
I thought it was the rule that a manufacturer could not tell dealers what to charge (hence “Suggested”), but at least in computers, Apple defies that rule.
The problem with the Tesla model is that it cuts out the dealers if you buy direct from the manufacturer; Tesla has spent (is spending) serious money fighting against laws that prevent manufacturers from selling direct to the public in some states. It led to stupidities like the car being paid for “in California” (or was it Nevada?) before being delivered, so the sale did not happen in state. Some states have tried to eliminate manufacturer-owned service centers too. All because many car dealers are rich big fish in small ponds of small-town America and so have inordinate clout with politicians. Plus they don’t want to sell cars that require minimal service - no oil changes, tune-ups, repairs to assorted pieces that tend to fail thanks to extreme heat cycles… There’s more money to be made in service for gas cars.
As for selling through a dealer but charging a fixed price - dealers see the writing on the wall, what’s their angle against others if they can’t hedge on price? Plus, who sets the commission for the dealer?
Many years ago when I bought a Honda motorcycle (1979!) the catch was that if you needed warranty work you had to take it to the dealer you bought it from, unless you had moved more that 50 miles from your original residence. (Or once when I was on a long-distance trip) This limited any price competition from out-of-market dealers.
That’s a feature, not a bug. Car dealers are nearly universally hated and people are eager for alternatives - the new car sales industry is ripe for disruption. Use car sales have been pressured by Carmax, and now the likes of Carvana and Vroom - hopefully it won’t be long before something like that happens in the new car space.
