When it comes to buying a new car, the Manufacturer's Suggested Retail Price (MSRP) is often seen as a daunting, non-negotiable figure. But, as it turns out, this price tag is more of a suggestion than a strict rule, and it's a great starting point for savvy negotiators.
The History and Significance of MSRP
The concept of MSRP can be traced back to the mid-1950s, when Congress, led by Senator Almer Stillwell Monroney of Oklahoma, passed the Automobile Information Disclosure Act of 1958. This act required car manufacturers to display a window sticker, now known as a "Monroney," on each vehicle, detailing crucial information, including the MSRP.
What many people don't realize is that the "S" in MSRP stands for "suggested." It's a price suggested by the manufacturer, but it's not set in stone. In fact, it's a tactic to give dealers some wiggle room for profit.
Uncovering the Real Deal
Car dealers, much like grocers, aren't keen on revealing their cost prices. They don't want you to know how much they paid for the inventory, as it could influence your willingness to pay. However, there are ways to get an idea of what a car is truly worth.
Tools for Negotiation
One handy resource is Truecar.com, which provides a live index of actual selling prices for various car models. While Truecar is in the business of helping dealers, their extensive network of franchises offers a decent snapshot of the market. For instance, we found a Ford Mustang Mach-E with a savings of $2,361 off the MSRP.
Edmunds, another player in the game, offers the Edmunds Suggested Price, which is based on what other shoppers are paying in your area. When we looked at the Honda CR-V, we found a suggested price $1,493 below the MSRP.
For used car shopping, CarGurus provides an average selling price for most models, considering factors like mileage and trim. While it only tracks dealer pricing, it gives a good indication of the going rate, which can be valuable when negotiating with private sellers.
The Myth of MSRP
The key takeaway is that MSRP is a mythical figure. Most people don't pay the suggested price, and the average selling price is a more accurate indicator of what you should be aiming for.
In my opinion, understanding this dynamic is empowering. It shifts the power back to the buyer, allowing for more informed and confident negotiations.
Final Thoughts
So, the next time you're car shopping, remember that the MSRP is just a starting point. With the right tools and a bit of research, you can uncover the real value of the vehicle and negotiate a fair deal. It's all about knowing your worth and standing firm in your negotiations.
