MSRP: The S Stands for Suggested

car msrp

The 840-horse 2018 Dodge Demon has stirred the debate once again about dealers selling vehicles over MSRP.  Fiat Chrysler has tried to control this from happening.  Dealers must send in a notarized document showing the sale price.  If it is at or below the MSRP (window sticker price) those cars will be allocated first.  Those over MSRP will be built last.

Some dealers, however, have found a way around this.  They are auctioning off the opportunity to buy a Demon at sticker price.  That way, the paperwork will clear the process Fiat Chrysler put in place, but get to pocket a premium.

 Do All Dealers Charge Over Sticker Price 

The truth is, when a rare, much sought after vehicle is introduced and creates a stir, the open market determines the price. Some car dealers charge over MSRP and some dealers have a policy of never charging over the window sticker.

I hear from people who are incensed when a dealer charges more than sticker price.

I hear from people who are incensed when a dealer charges more than sticker price. It is a tough call for me. Dealers do not get many opportunities to sell a vehicle for more than sticker price, and the window of opportunity closes quickly.

It is Really important to note that MSRP stands for Manufacturer’s SUGGESTED Retail Price. For those people who are angry when a dealer wants more than MSRP, they must realize that 99.99% (or sometimes 100% depending on brand) of the transactions happen at well under MSRP. Bottom line, you can’t have it both ways. If you want a much-desired car early on, you’ll pay a premium. It is called supply and demand.

 Sometimes, It Pays To Be Patient 

Seldom does a car come out that is in short supply, and it stays that way. The all-new 2014 Corvette C7, like the one I bought, was a good example. Dealers were able to charge over MSRP (if they chose to) for most of the 2014 model year. People were lined up for the new C7, and it was a seller’s market.

When the people who truly want a car have gotten one, prices start to fall.

Near the end of the model year, however, I started to see dealers discounting the cars, not a lot, but as much as $2000. This is a common situation. When the people who truly want a car have gotten one, prices start to fall. It is not unlike the seats to a sporting event, there is always someone out there willing to pay way over the stated price to be able to participate. Think of the 2016 Super Bowl, face value averaged under $1000 each, but some seats brought over $20,000 and the average price on the open market was $4850.

If a new car comes out you that you just have to have, be prepared that the price is going to be high. Usually, however, those prices will come down.  Much depends on how many are being made.

 It Is Not Just The Dodge Demon 

The 2018 Honda Civic Type R is a good example.  They will make 6,000 of these over a two-year timeframe.  Many dealers are selling them for between $5,000 and $15,000 over the sticker price. One dealer on the West coast is asking $30,000 over.  The 2017 Acura NSX that came out last year was selling for $50,000 over sticker and there was a waiting list.  Today, you can probably get a discount under MSRP. 

The upcoming Ford GT500 is likely to bring $200,000 over the $450,000 MSRP for one that is titled.  Ford is only making 400 of them total.  The redesigned 2017 Ford F-150 Raptor has sold consistently for $10,000 over sticker.

 The Dealer Perspective 

Before you get angry with your dealer for marking a vehicle up, understand what goes on behind the scenes.  Although they will deny it, automakers “package” hot cars.  I’d meet with my factory rep monthly when I was a Ford dealer, and the conversation went something like this:  “tell you what, take 50 Ford Contours, and I’ll get you an extra Ford GT500”.  You knew you’d lose money on every one of those Contours and you’d have to pay interest charges on them while they sat.  The only way to make it work was to charge a big premium for that one GT500.

Before you get angry with your dealer for marking a vehicle up, understand what goes on behind the scenes.  

In 2002 when the new Thunderbird came out, they were selling like crazy and bringing $5000 over sticker price in the Metro areas.  I found a niche by monitoring Ebay.  Some of the small dealers across America didn’t have a big market for the cars.  As a Ford dealer, I bought over 100 of them on Ebay AT sticker price, plus shipping.  Obviously, I could not sell the cars at the sticker price and with about a $1500 profit per car, I could sell them for $2000 over window sticker price and sold them as soon as they arrived to appreciative customers.

 In Closing 

You can get the vehicle of your dreams, but sometimes you have to be patient to get a deal on one.  Many vehicles that start out over MSRP, end up being plentiful.  The Dodge SRT Hellcats sold for thousands over sticker price, today there are unsold 2016 models deeply discounted. 

Many people truly think it is illegal for a dealer to sell a vehicle over MSRP, and nothing could be further from the truth.  If that were true, it would also be true that dealers could not sell under sticker price, and nobody wants that.  The open market will always dictate the final price of any commodity, without regard to what a carmaker suggests you sell your product for.



Photo Credit: Lentz/Shutterstock
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