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To get bottom prices on a new cars, buyers need to be familiar with how the sales price breaks down. You will need to know the differences between dealer invoice and the MSRP.
The MSRP (Manufacturer’s Suggested Retail Price) is the selling price the car manufacturer recommends to the dealership. The “sticker” you see on a new car lists specifications important for a buyer to review.
The sticker not only contains a description the car, fuel economy (MPG), but also key information such as the MSRP, destination charges, optional equipment along with the final ‘retail’ price.
You should pay particular attention to the “Optional Equipment” listed on the sticker, as that is where the sales price quickly increases. You should evaluate whether or not you want all the listed additions – if you don’t, then why pay for them?
The factory invoice price or the dealer invoice price is the price a car dealership pays the manufacturer for each vehicle it buys – what so many people don’t realize is the dealer invoice is not necessarily what the dealer paid.
Many dealerships qualify for “rebates” and “volume discounts” that can substantially lower the cost the dealer truly paid for the car. Additionally, there could be factory installed “optional equipment”, as well as delivery/destination charges causing the invoice price to increase.
By knowing what rebates and discounts factor into the sticker price - as well as any optional equipment - you’ll be in a good position to negotiate a fair sales price on a new car.
Compact cars refer to hatchbacks and smaller sized vehicles, such as the Volkswagen Golf, Honda Civic and Buick Verano. A study of various compact cars indicates an approximate average of 7% difference between dealer invoice and MSRP; for an average $1,772.00 price difference.
Sports cars are typically a small-sized vehicle class that combines performance and handling. Examples are the Mazda MX5 Miata, Mitsubishi Eclipse and Volkswagen Eos. A study of various compact cars indicates an approximate average of 13.6% difference between dealer invoice and MSRP; for an approximate average of $3,745.
A Hybrid car is typically an electric automobile which combines an internal combustion engine as well as an electric motor which is powered through batteries. Examples of Hybrids are Toyota Prius V, Honda Civic Hybrid and Ford Fusion. A study of various compact cars indicates an approximate average of 6% difference between dealer invoice and MSRP; for an approximate average of $1,609.
Trucks are essentially described as a light motor vehicle with an open-top rear cargo area (bed). Trucks come in a variety of sizes and builds depending on how a buyer is going to utilize it. For example purposes types of vehicles classified as a truck include the Toyota Tundra 4WD, Dodge Ram 3500 and Ford F-150. A study of various trucks indicates an approximate average of 13.6% difference between dealer invoice and MSRP; for an approximate average of $4,459.
A Midsize car typically refers to a standard car with a size equal or greater than a compact. Examples of a midsize car are would be the Chevrolet Malibu, Ford Taurus, and Volkswagen Passat. A study of various midsized cars indicates an approximate average of 11.6% difference between dealer invoice and MSRP; for an approximate average of $2,981.
As the term suggests, a Luxury car would be a vehicle with better equipment, performance, comfort, technological innovation or features that convey brand image, status or prestige. Luxury cars can come in all shapes and sizes. Examples of a luxury car would be the Audi A6, BMW 7 Series and Mercedes-Benz CLS. A study of various midsized cars indicates an approximate average of 4% difference between dealer invoice and MSRP; for an approximate average of $2,550
Mini-Vans are designed for personal use and typically are taller than a sedan, hatchback or station wagon. Examples of mini-vans would include the Chrysler Town & Country, Honda Odyssey and the Kia Sedona. A study of various mini-vans indicates an approximate average of 11.7% difference between dealer invoice and MSRP; for an approximate average of $3,258.
SUVs (Sports Utility Vehicle) are meant to be the modern version of a typical family car, with the interior space of a minivan and the ruggedness of a pickup truck. Some SUVs are equipped with all-wheel drive or 4x4 systems for increased off-road abilities. Some SUVs are gifted with the ability to tow heavy loads while still remaining spacious and comfortable even on long drives. There are also SUVs that give the ride comfort of a full-sized sedan. Examples of various SUVS on the market would be the Chevrolet Tahoe, Dodge Durango and Ford Explorer. A study of various trucks indicates an approximate average of 10% difference between dealer invoice and MSRP; for an approximate average of $3,350.