Auto MSRP Sticker Price or Invoice Price
How to Negotiate the Best Price When Buying an SUV or Car
Oct 13, 2009
Car buyers are familiar with the term auto sales commission, but do they understand the difference between the MSRP, sticker price and invoice price?
Becoming a more informed car buyer helps when negotiating a good price on a new SUV.
What is the SUV MSRP?
The MSRP stands for the manufacturers suggested retail price. That's all it is, a suggestion. The car dealership has leeway in determining the price for which it intends to sell the SUV. The price includes the cost of manufacturing the SUV, vehicle options, where the car is being sold and consumer demand. The MSRP sticker must be affixed to the car window and may not be removed except by the individual who purchases the car.
Sticker Price vs. MSRP
The sticker price can be higher than the SUV's MSRP. The sticker price is where the dealership adds costs that are not included in the MSRP such as transportation costs (or destination charges), after market additions and/or upgrades to the vehicle. If a particular model of a car becomes popular and the dealership recognizes the high demand for the vehicle, the dealership can increase the sticker price, keeping in mind that the MSRP is only a 'suggested' price.
How does the Dealer Invoice Price Fit in the Mix?
The invoice price of the SUV is price the dealership pays for the vehicle. It will be lower than both the sticker price and MSRP. Some consumers feel they've negotiated a deal if they purchase an SUV for less than the MSRP. Keep in mind that the auto manufacturers provide the MSRP as a way to build in the dealerships profit since the net difference between the invoice price and the MSRP usually belongs to the dealership. After all, they are in the car dealership business to make a profit.
How to Find the MSRP, Sticker and Invoice Price
Edmonds.com lists the MSRP for all new vehicles and the invoice price for most of them. In addition to the MSRP and invoice price, Edmonds provides a worksheet for each vehicle model that allows consumers to add in the cost of after market options and upgrades. This calculates what Edmonds calls the true market value (TMV) of a vehicle.
Armed with the true market value, consumers can begin an informed negotiation process.
Additional Tips for Negotiating the Price of a New SUV
There are a variety of factors that go into negotiating the best price for a new SUV. In addition to non-car related things such as amount being financing, the consumer's credit score and how much cash the car buyer is willing to use as a deposit, listed below are a few things to consider:
- Purchase new cars late in the year. It's no secret that by the end of the year, dealers are looking to make room for new inventory. By purchasing a new car late in the year, there is a better chance of negotiating a better SUV price.
- Opt for a less popular model. The higher demand for a particular model, the more a dealership will charge. Barring any known mechanical problems, look to purchase a model that is less popular. The lower the demand for a car, the lower the price.
- Travel a little if necessary. Purchasing a 4-wheel drive SUV in the middle of a Chicago snow storm may cost a bit more than purchasing the same vehicle during the summer heat in Louisiana. The example is a bit extreme, but climate and location affects car demand and similarly car pricing.
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