What Does MSRP Mean?

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MSRP stands for Manufacturer Suggested Retail Price and is the price that a manufacturer suggests a Sterling dealership sells a vehicle at. Also sometimes referred to as the list price. Most dealerships actually purchase the vehicles from the manufacturers at what is called an “invoice price.” Since the MSRP is higher than the invoice price, they get a profit from selling a vehicle. Then, what does MSRP mean for you? Well if you’re shopping for a new vehicle near Tysons Corner, you can use this to your advantage to get a better deal. Learn how MSRP is calculated and how you can use it today with the Lindsay Volkswagen of Dulles finance team.

What Does MSRP Mean?

What is MSRP exactly? Like we said above, MSRP is the price manufacturers recommend to dealerships when a vehicle is put on the market. But why have a recommended price? And how does it work? Here are some facts that will help you feel more confident while car shopping near Springfield:

  • A particular model will share the same MSRP across all dealerships as the price is set by the manufacturer.
  • While the MSRP is the same for each vehicle of the same model, it won’t be the same for every vehicle the manufacturer sells. For instance, SUVs will have a different MSRP than a sedan or a truck.
  • Car shoppers can find the MSRP on the manufacturer’s website or the dealer’s website, and they can use it when negotiating the price of their new vehicle.
  • The MSRP sets a vehicle’s base price at its entry-level configuration without additional features or accessories.
  • Additional features and higher trim levels will raise the cost of the vehicle accordingly.

How is the MSRP Set?

Now that we’ve answered, “What is MSRP?” you may be wondering how the MSRP is set. Generally, when creating an MSRP, automotive manufacturers consider the following:

  • MSRP is balanced to maximize the profit of dealerships while still ensuring there is demand for the vehicle.
  • While the MSRP is recommended by the manufacturer, it’s not necessarily the price the dealership will choose to sell the vehicle at.
  • Depending on the invoice price for the vehicle – the price the dealership paid for the vehicle – the dealer may raise or lower the price of the car for Alexandria shoppers.
  • Demand also plays a role in how much a vehicle costs. A popular model will most likely be sold closer to the MSRP, while a less popular model may be set at a discount.

What Does MSRP Mean for Me?

You can use the MSRP to get a better deal. Since the dealership buys the vehicle at the lower invoice price and sells it at the higher MSRP price, you can generally negotiate the price of your vehicle to below the MSRP. Here are some ways you can increase your chance of success when doing so:

  • Do your research by checking what other Sterling drivers have paid for the same model on sites like Kelley Blue Book, Edmunds, or Cars.com.
  • Start your negotiation below the MSRP, and work your way up from there – keeping in mind any additional features you want and what they may cost.
  • Some dealers may let you see a car’s invoice price if you ask, however they are not obligated to. The invoice price can help you determine where you should start your price negotiation.
  • If you plan to lease you can still negotiate the MSRP since the price you and the dealer agree on will determine your monthly payment costs.

The Lindsay Volkswagen of Dulles Finance Center Has Your Back!

With your new knowledge about MSRPs, you’re ready to get a great deal when buying your new car! Read our other car buying tips to be even more prepared, or if you want to get started on buying a new car today, apply for financing online. Be sure to check out our new vehicle specials and get an even better deal! Just contact us with any questions.

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