How Much Off Msrp On New Car

The days of paying over sticker price for a new car might finally be fading, but significant discounts off the manufacturer's suggested retail price (MSRP) are still far from guaranteed, creating a complex and often frustrating landscape for car buyers.

This article examines the current state of new car pricing, analyzing how much consumers can realistically expect to save below MSRP, factors influencing these discounts, and expert advice for navigating the negotiation process. Understanding the current market dynamics is crucial for securing the best possible deal on your next vehicle.

What's happening with car prices?

For much of 2021 and 2022, the automotive industry faced unprecedented challenges, including supply chain disruptions and microchip shortages. This resulted in historically low inventory levels and soaring prices, with many dealerships charging well above MSRP, often referred to as "market adjustments."

However, as supply chains gradually recover and production ramps up, inventory is improving, shifting the balance of power slightly back towards the consumer. Data from Kelley Blue Book and Edmunds indicate that new car transaction prices are slowly declining from their peak, but still remain elevated compared to pre-pandemic levels.

How much can you expect to save?

The amount you can realistically negotiate off MSRP varies widely depending on several factors. These include the make and model of the vehicle, its popularity, location, and the dealership's specific inventory situation.

According to J.D. Power, the average discount off MSRP in early 2024 was around 1% to 3%. However, this is an average, and some vehicles, especially those in high demand, may still command close to or even above MSRP.

On the other hand, less popular models, or vehicles that have been sitting on the lot for a while, may offer significantly deeper discounts. Luxury vehicles and those with less consumer demand may see discounts of 5% or more.

Factors influencing discounts:

Inventory levels play a key role. Dealerships with ample inventory are more likely to offer discounts to move vehicles off the lot.

The time of year can also influence pricing. Dealerships often offer incentives and discounts towards the end of the month, quarter, or year to meet sales targets.

Manufacturer incentives such as rebates, financing deals, and lease offers can further reduce the final price. Keep in mind that some incentives may not be stackable, meaning you can only choose one.

Your negotiation skills are also crucial. Researching the vehicle's market value, obtaining quotes from multiple dealerships, and being prepared to walk away can significantly improve your chances of securing a better deal.

Tips for Negotiating a Lower Price

Do Your Research

Before stepping into a dealership, research the true market value of the vehicle you want. Websites like Kelley Blue Book, Edmunds, and Consumer Reports provide valuable pricing data.

Understand the difference between MSRP, invoice price (what the dealer pays), and the actual price consumers are paying in your area.

Shop Around

Obtain quotes from multiple dealerships. Email or phone inquiries can be a convenient way to gather information without the pressure of being physically present at the dealership.

Be prepared to negotiate. Don't be afraid to make a counteroffer. If a dealership is unwilling to meet your price, be prepared to walk away.

Consider Alternative Options

If you're struggling to find a new car at a reasonable price, consider exploring alternative options. These include buying a used car, waiting for inventory to improve further, or considering a different make or model.

Certified pre-owned vehicles can offer a good balance of price and reliability. Be sure to have any used vehicle inspected by a trusted mechanic before making a purchase.

Be Aware of Add-ons

Dealerships often try to sell add-ons such as extended warranties, paint protection, and other extras. These can significantly increase the final price of the vehicle.

Carefully evaluate whether these add-ons are truly necessary and negotiate their price separately. You can often purchase these products for less from third-party providers.

The Outlook

While the automotive market is showing signs of recovery, it's still uncertain when significant discounts off MSRP will become commonplace again. Economic factors, such as interest rates and inflation, could also influence car prices in the coming months.

For now, consumers should continue to do their research, shop around, and be prepared to negotiate to secure the best possible deal. Patience and persistence are key.

By understanding the current market dynamics and employing effective negotiation strategies, you can increase your chances of driving away with a new car at a price you're comfortable with.