New car buyers always pay more than MSRP. How to pay less

A couple consults the stated price of a car.

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With demand for new cars still outstripping supply at many dealerships, buyers may wonder if they will have to pay more than the average manufacturer’s suggested retail price or list price to get the car they want.

According to data from Kelley Blue Book, September marked a record sixteenth consecutive month in which average new vehicle transaction prices, or what the buyer actually paid, were higher than list price.

Automakers have faced a major inventory shortage over the past year due to the impact of computer chip shortages and other supply chain issues, pushing up prices paid as buyers vie for the few cars available on the square. While the average price paid for a new vehicle in the U.S. in September fell 0.3% from August to about $146, that figure is still up significantly over the past year. In September, the average price of a new car was $48,094, up 6.1% or $2,775.

Automakers say demand is holding up, and Cox Automotive expects third-quarter new vehicle sales to be 3.4 million, down less than 1% from a year ago. General Motors said its third-quarter car sales rose 24% from a year ago, while BMW and Hyundai also reported increased sales in the same period.

But there are signs that new cars are coming back into stock, and many consumers are choosing to spend less and save more as they face inflation and a looming recession. Does this mean new car buyers should stop paying above MSRP?

Brian Moody, editor of Kelley Blue Book, said that while any potential new car buyer should still be comfortable paying at least MSRP, consumers concerned about sticker shock at the dealership should consider the following steps to find potential savings.

Check for price differences at local retailers

Moody’s said one of the best places to start figuring out what you’ll pay for the new car you want is to shop around and check prices at local dealers.

If all of them have the car you want under $500 or around the same price, that’s probably about the price you’ll pay, he said. However, there may be cases where thousands of dollars separate those prices, a situation that Moody’s says should prompt you to “call this price cheap and say, ‘What’s going on here, how? can I get this price?'”

Moody’s said that even if you’re considering a car that’s consistently priced above MSRP right now, it’s still worth checking the price at different dealers. For example, he says, he recently visited a dealer in Los Angeles who was selling Ford Broncos at MSRP, starting around $31,300 for a 2022 model. From July 1 to Sept. 7, a new Ford Bronco cost an average of 21.6% more than MSRP, or nearly $8,700 more, according to data from iSeeCars.

Expand your potential car choices

One of the main reasons for these high prices of new cars is the purchase of luxury cars. In September, luxury car buyers paid an average of $65,775, down slightly from August’s record high of $65,835. On top of that, luxury car buyers tend to pay more than MSRP. For example, Mercedes-Benz buyers paid between 2% and 4% more than the list price.

Moody’s said being open to other automakers, even in the same vehicle class, could save buyers money. Buyers of Audi and Lexus luxury cars, for example, paid just under 1% below MSRP in September.

This was also the case for non-luxury manufacturers Ford, Honda and Toyota, which also sold on average about 1% below MSRP in September.

“If you go model by model, car by car, you might have a way to save money,” Moody said.

Think of a used car

If saving money is a top priority, potential car buyers may want to look at the used market, where supply and demand are very different from new cars.

While there are about 1.2 million new cars in inventory in the U.S., the inventory of used cars is more than double that, Moody’s said.

On top of that, the average price of used cars continued to fall, even though it was coming down from a very high level. In August, the average used car sold for $28,061, down 4% year over year but still up nearly 40% from December 2019 before the coronavirus pandemic. Covid-19.

The latest decline is a function of a decline in used car sales, down 9% in August from a year earlier, making it even more likely that you can grab a bargain on a lot of used cars.

Decide if you want to haggle

If you’re worried that what the sticker on the window says and what the salesperson says will be very different, you’re not alone.

Most buyers don’t like the negotiation process when buying a new car, Moody’s said, and some dealers have responded by opting for a one-price model more akin to buying a new car. a new TV where the listed price is what the buyer would pay.

“You don’t want to go to Target and see a TV listed at $900 and bring it to the register and ask to pay $750,” Moody said. “We are seeing the one-price model becoming more prevalent as there are more buyers who prefer it or will even be willing to pay more to have the negotiation process eliminated.”

Moody’s said that if you like haggling over prices, you can certainly still try, but he noted that because supply is still relatively low and demand is still relatively high, many sellers “don’t have time to have fun” .

“They want to sell as many cars as possible so they can just move on to the next customer,” he said.

If you want a popular car, be prepared

But if you have a Jeep Wrangler or a Ford Bronco in mind, two of the best-selling car models right now, you might have to accept paying more than list price.

“If you want to go out and buy what everyone else wants, you’re going to pay more,” Moody said. “You can’t go and ask for it to be $1,000 less than MSRP; that’s not going to work because 10 people are waiting to buy this car at a price above MSRP.”

Ultimately, the trick to getting a deal right now for a new car buyer is “to go for the less popular stuff,” Moody said.

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