When pricing a new car ?
Accordion
No. The dealer can charge whatever price they want to for the car no matter what the MSRP is or what KBB, NADA, or anyone else says.
Try using it to negotiate with. The salesman will either say yes or no.
KBB, NADA, MSRP,… they’re all just references. Your negotiating skills, how in demand the vehicle is, and how desperate the dealer is are all that really count.
Nobody can force you to pay more for a car than you want to pay, and if the price seems too high, just move on to other dealerships.
Some dealerships will add “dealer packs” of essentially useless, low-quality add-ons in order to increase their profit, but even the price of this useless junk is negotiable.
In other words, nothing is “official” when it comes to the selling price of a car.
That is why a car buyer needs to do his due diligence by visiting competing dealerships in order to get prices, and by using information from the internet, when negotiating.
Knowledge is power–to quote an old saying–and knowing what several dealerships would charge for the same car is a type of power that you can use to “leverage” a better price–in most cases.
Many dealerships will match a legitimate price from a competitor or from a verified internet source if they want to make the sale.
My last 2 new vehicles have been purchased from local (dealerships across the river) My small town has no dealerships or even used car lots. Both had the additional sticker of $2,000 additional dealer markup. WTH! Nooooooo! I told them that had to go and it did. I suspect this markup is only for ignorant suckers which is probably the elderly. shame on you. I presented both with a quote from the 50 mile away big city and explained truthfully that I would prefer to spend my money locally. The first car was less than the big city price. The second was much less than the big city price. When buying a new car please do your research.
Good, great, Thanks!
Accordion
The only thing that takes precedence over MSRP is, what the dealer will actually accept for the vehicle.
NADA and other values too can vary from location to location. The MSRP is set by the manufacturer, regardless of where it is ultimately sold. Car dealers have a tough life as they are often restricted by what they paid for at auction or allowed for trade in for the car. A key to negotiating a good fair price for you, is often a matter of timing and car model popularity.
MSRP is a guideline to show the value of the vehicle. A dealer can charge what-ever they want though. Some vehicles have sold ABOVE MSRP (some well above). The first year Miata was selling 20-30% higher then MSRP. The first year of the Viper was selling almost 100% over MSRP.
Places like KBB or NADA show you prices for what those vehicles are typically selling in your area (Or nationally). I haven’t bought a vehicle even close to MSRP - EVER. Depending on the vehicle you can usually negotiate anywhere from $1000 to $7000 off of MSRP (and the dealer is still making a profit).
Hidden from buyers, especially at model change-over time are rebates from the manufacturers to their dealers. This makes MSRP almost meaningless…Sometimes dealers will have previous model year left-overs, unpopular cars sitting on the back row of the lot…Here is where huge discounts can be had…
The price is whatever the salesman thinks he can get for the car. If it is popular, then MSRP is about what you will pay. And don’t forget shipping and marketing fees. Both are legitimate fees, and you will pay them whether they are on the invoice or not. If this is the only dealer for miles around, you are stuck unless you will go to a large city where there are several dealers. Edmunds show active incentives on their web site. Scroll to the bottom of the first page and look for “incentives and rebates”. This page tells you what rebates are available and if there is market support for the dealer. Market support is code for a dealer rebate, and you should be able to get some or all of that. Honda uses market support. Edmunds also has “true market value” below the incentive button on the first page. Enter your zip code and you will get an average sales price for the car you want in your area. It works for me, but I live in a large metropolitan area.
KBB under values cars as compared to NADA. Dealers will often value your vehicle per KBB (although nada has wholesale values) and your purchase price per NADA.
Watch them!
For the two new cars that I bought, the MSRP was irrelevant and I only found out what they were when I was taking the stickers off the car. It is a suggested sales price. Lets say Coke put a suggested sales price of $2.5 per can. Now in the middle of desert, if you are dying thirsty, you might pay $5 for it. On the other hand, when you have the luxury of time and shopping around, you would check the circulars and decide the $0.99 in the supermarket around the block is the best deal and that is where you go. Now that shopping around is a bit more complicated for cars, but the concept is the same.
Consumer Reports is another useful source. Their guide shows what people paid on average for a particular model, though that doesn’t necessarily include options. You can add them in. Most of these sources will give you an idea how much demand there is for a car. The super hot models go for over msrp, some duds start out well below msrp and drop from there. I think straight MSRP is about the least useful figure. For most cars there are established manufacturer rebates in a body style’s later years, sometimes sooner than than that.