New car buyers through 2022 paid an average of about $700 above the manufacturer's suggested retail price, according to Edmunds data. Those shopping for a new vehicle today may experience sticker shock after seeing that a dealer has priced the vehicle they want well above MSRP.
Dealers have the ability to set prices using additional accessories and price increases. These so-called market adjustments and, by extension, dealer-added accessories on new cars were once reserved for highly anticipated vehicles or limited edition models. But now they are commonplace and part of the cost of doing business in today's marketlow inventoryand high prices.
Edmunds experts know what to expect from dealers for the rest of 2022 and offer tips on how to get the best deal.
WHAT ARE THEY?
You can find these markings on the windows of new vehicles at a dealer or, in rare cases, on the dealer's website. You will need to look for a rectangular sheet of paper that is often located near the official window sticker of a new car or sometimes on the windshield. Formally it is called an add-on or additional window sticker. The addition includes some dealer-installed accessories, an aftermarket modification, or a combination of both.
Even though it is not an official factory sticker, that does not mean you can ask the dealer to have the charges removed. What makes it challenging for the customer today is that if you don't want to pay for these items, the retailer will happily wait for the next customer to do so.
MARKET ADJUSTMENTS
A market adjustment or markup is essentially a fee devised by the dealer to reflect a low supply, high demand situation. It can range from a few thousand dollars on regular vehicles and up to $50,000 on high-end or limited production vehicles.
DEALER INSTALLED ACCESSORIES
Common add-ons include anti-theft equipment that costs between $800 and $1,500, sill protectors that can range from $400 to $800, and nitrogen-filled tires that can range from $90 to more than $700 if included in the guarantee. Combined, these items can add thousands to the cost of a new car.
For those not interested in these extras, it's not as simple as asking to have them removed as they are already installed. For example, you cannot remove a ceramic paint after it has been sprayed on the vehicle. The agreement becomes more complicated because you are now negotiating on several fronts: the accessories, the price of the car and perhaps also your trade-in.
TIPS FOR DEALING WITH ADD-ONS OR MARKUPS
Confirm the price increases: Once you've identified a car you're interested in, call ahead and ask if it has a price increase or comes equipped with dealer extras. If so, find out what the items are and how much they cost.
Cast a wider net: Not all traders will subscribe to this "market adjustment" philosophy. Your goal is to find these dealers and shop from them. You may need to cast your net wider for a dealer out of town or in the next county. To find them, you can search online using terms like "dealers with no markup (brand) in (city or state)" or "dealers with a higher MSRP in (city or state)." Look for forum threads where people discuss this topic.
If you want the accessories, there is some value in many of the added items, the convenience of having them already installed and the ability to include the cost in your car loan. But it's important to note that you'll likely pay more: the dealer probably increased the price of the accessories 40% to 50% over what he paid for them.
Feel free to haggle: Dealers don't always expect people to pay the full markup, so if the vehicle you really want has a market match, try offering half the cost. The dealer may argue, but this can be a win-win for both parties: you can save thousands of dollars and the dealer still sells the vehicle for above MSRP.
Order the Car: This option requires patience and planning, but in most cases a factory-ordered vehicle will likely not be tagged. You can get exactly the car you want at the suggested retail price, provided you're willing to wait. If a dealer insists on adding accessories to a factory-ordered vehicle, we recommend shopping elsewhere.
EDMUNDS SAYS: At a time when vehicles are scarce, dealers want to maximize profits on each car because margins on new cars are already low. While market adjustments and add-ons can be frustrating and expensive for consumers, they are within the retailer's rights. After all, the 'S' in MSRP stands for 'suggested'.
Author Biography:
This story was delivered toAssociated pressfrom the automotive industry websiteEdmunds. Ronald Montoya is senior consumer advice editor at Edmunds. Twitter: @ronald_montoya8.
