Car buying basics

[izwar]

Ok dont kill me lol but i have always been confused about a lot of stuff when it comes to dealers, ive always bought used cars so mabie that is why. What is MSRP?

lets say the top level SS will cost 35K , what would be a realistic price that you would really pay at a dealer. I always hear of dealers marking up the MSRP 10-20 K? How do you get a good deal on the car so it is very close the example of 35 K i gave.

thanks for the clarifications.

[Mr. Wyndham]

MSRP: Manufacturer's Suggested Retail Price

Dealers usually mark up Brand -New cars, a few thousand dollars the first year or so. They mark up brand-new "hot" cars even more...hence the 10-20+ MSRP you heard...it does happen. If your looking at a Car that's 35,000, You can realistically haggle down to 30,000 after all the incentives and such.

A 35,000 Camaro, first year out? Don't count on paying below 34,000 unless the dealer REALLY REALLY likes you...

But still, 35k is a little much to begin with (guestimates)

[izwar]

Ok so when chevy releases official prices these will be the MSRP of the car?

now from the MSRP is the starting point at which you negotiate with the dealer correct?.

How can dealers get away with pricing up a car 10K when people clearly know the MSRP? In this case i guess you just have to do a lot of searching for a dealer that is going over the MSRP?

P.S i just guessed 35 becuase i am intersted in the highest model chevy will offer even if it means ordering it i honestly beleive the highest model will be 40 (MSRP?) lol.

[Mr. Wyndham]

Yes, MSRP will be the "starting point".

They get away with it - because people pay it!

Just the other month, a dealer near me started trying to BS me into believing that Camaro is going to be limited production. and he'll only get a few. This was like; last year he said this - nobody knew anything, yet!!!

He was trying to get me to believe they'll be worth more than they were (hence the markup!!) (sigh)

As for real prices, check out the pricing thread: good stuff!

[dgraves]

My Avalanche sticker was just over 38,400. I ended up paying 29,000 with no trade in or down payment. There is no reason a dealer can't come way off the price if they want to. I was shopping two dealerships and knew exactly what I wanted. Two months later GM started the Employee pricing sale... I looked up pricing on the same truck as mine and even the employee price was higher than what I paid. Dealers are full of S***!!!

[rray200]

I think GM has to be very careful about markups. People looking at this Camaro will be cross shopping it with the Mustang, which is competitively priced. Mark the price up too much in the beginning and only the Chevy die hards with deep pockets will buy it, which won't make the car profitable.

We have to be practical. The only recent precedence we have for high mark ups on muscle cars is the current Mustang when it first came out and the Shelby GT500. And the only reason those cars were marked up is because Ford has no competition, being the only muscle cars on the market. With Camaro and Challenger coming into the picture, there will be competition. And competition logically has downward pressure on prices. We may not be gouged as bad as we think.

[izwar]

great everything is cleared up now thank you!!

[The_Stache]

Not to try and confuse the issue but the other term you may hear thrown around is Invoice Price.

Invoice price is the Actual price the dealer paid to the car manufacturer.

Legally the dealers do not have to tell you the invoice price, but some will give you a FAKE invoice price to try and bully you into a deal saying "hey look at what little profit we are making!"

One good shopping tip is to first find the approximate invoice price(obviously the more accurate services will probably charge a fee usually like $50) or web estimates like Edmunds.com which are usually less accurate (but in the ball park) and then negotiate for a price between Invoice and MSRP.

[JWz28]

Originally Posted by diarmadhi

Not to try and confuse the issue but the other term you may hear thrown around is Invoice Price.

Invoice price is the Actual price the dealer paid to the car manufacturer.

You're getting close but not 100% there.

Dealer's Actual Cost = (Invoice Price - Factory To Dealer Incentives - Factory Holdback)

The Dealer may have paid the manufacturer the Invoice price, but after he sells the car the Factory pays the Dealer an incentive payment which lowers his true cost. Depending on the MSRP of the car or the time of the year it can range from $500 upto $10K (if its a top-of-line Mercedes). The Factory also pays Dealer what is called a Dealer Holdback which is typically 2-4% of the MSRP of the car which also reduces the Dealer's true cost. You need to calculate what a dealer's true cost is and then gross it up by 5-6%. That's a fair price.

It's kinda like when you buy something at an electronics store and get a mail in rebate...You "Paid" $400 for your new computer and you have the receipt to prove it (read Dealer Invoice), but after the Mfg. sends you your $50 mail in rebate (read Factory to Dealer Incentives and Dealer Holdbacks), your true cost is $350.

If you don't want to do all the research to figure out the Dealer's true cost a good rule of thumb is to take the unadjusted MSRP from the window sticker, subtract the Destination Charges and multiply that number by .85. Add back the Destinations and gross that number up by 5-7% for a fair offer.

I say unadjusted MSRP because they sometimes add on things such as "Dealer Prep", "Market Value Adjustments", and other cr*p that is nothing more than pure profit margin padding.


JWz28.

[The_Stache]

Yea I wasn't going to get that complicated jwz28 but thats all the truth, most of us though would rather just shoot for the invoice, A LOT less work and that and its very hard to find that information for a specific vehicle because the FDI and hold back are time/market dependent.

Still its all good information.

[izwar]

completely makes sense but i didnt understand the bit on guestimating the invoice price, subtracting the destination price? what is this?. Other then i understand. Im sure by the time the cars are ready in the dealers we will all know pretty accurately what the invoice of the cars will be am i right?

[Mr. Wyndham]

Originally Posted by izwar

completely makes sense but i didnt understand the bit on guestimating the invoice price, subtracting the destination price? what is this?. Other then i understand. Im sure by the time the cars are ready in the dealers we will all know pretty accurately what the invoice of the cars will be am i right?

Ehhhh..... Maybe. It may take a few months after release for that info to get out...

If your really worried about that, go to www.kbb.com (kelly blue book), and find out what the Camaro's are selling for. then go from there. Honestly, there is no resonable price a dealer will refuse if you push hard enough. But be prepared to walk away, this scares them a little. Dealers are known to call you after you leave, if they really want your buisness.

BTW: By resonable I mean minus (at most) 10,000...

[izwar]

wow i wasnt even thinking anything close to 10,000 off the sticker i didnt know you can go that much lower off a new car. So if a dealer is asking 45 i wont be out of the question to ask 35? i guess im so used to used cars where if you asked for that much lower they would laugh in your face.

[Rock36]

As far as gouging and dealer markups go, you also have to worry about your fellow purchaser.

dgraves Avalance was $10K off sticker, but there could be other reasons for that. It could have sat on the dealers lot more than 60 days, and the dealer needed to move it off the lot. Dealers keep track of that sort of thing as well. The longer a car sits on their lot the more money the dealership loses.

You won't get a Camaro $10K off sticker even if the dealer could "afford" it. Because if you don't pay what they are asking, the guy that comes in 10 minutes after you will. At least at first, until enough of them start hitting the streets.