If you're in the market for a new car and have been searching online or on dealerships lots, you have probably seen the term MSRP. You may be aware that this stands for “manufacturer's suggested retail price”, but do you know what does that means? I have the answer and want to give it to you so that you will have full knowledge when you visit me at our dealership.
MSRP: What Does It Mean?
The MSRP, or manufacturer's suggested retail price, is simply the price that the manufacturer recommends that the dealer should price the car. This is also referred to as the retail price, or also the dollar amount that a retailer should be asking for the car according to the manufacturer. This is simply the price tag amount, but it doesn’t mean it’s carved in stone.
Although the MSRP is the suggested price, dealers have the freedom to ask more or less than this figure. If a car is in high demand, a dealer might include a determined market adjustment, which will increase the vehicle's price above the manufacturer’s suggested price. The dealer can do this because they feel that the market demand is high enough to bear more than the suggested price of the car.
On the flip side, dealers can also charge less than the MSRP. This is much more common and the suggested price is basically a starting point for negotiations. Dealers have the prerogative to change the MSRP because after all, it is just a suggestion. It is up to the dealer and you, the customer, to decide what your drive-off price of a car will be.