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Tuesday, September 27, 2022

Edmunds: How to reduce or avoid dealer markups?

According to Edmunds data, during 2022, new car buyers are paying an average of about $700 over the manufacturer’s suggested retail price. Those in the market for a new vehicle today may experience sticker shock after a dealership prices the vehicle above the MSRP.

Dealerships have the advantage of setting prices through additional accessories and price hikes. 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 have become commonplace and are part of the cost of doing business in today’s low inventory market. and increased prices.

Edmunds experts provide tips on what you can expect from a dealership for the remainder of 2022 and how to get the best deal.

What are they?

You’ll find these markups on the windows of new vehicles at dealer lots or, in rare cases, on the dealership’s website. You’ll want to look for a rectangular sheet of paper, often posted near a new car’s official window sticker, or sometimes on the windshield. This is formally called an addendum or supplemental window sticker. The addendum will include a number of accessories installed by the dealer, market adjustments, or a combination of both.

Although this is not an official factory sticker, it does not mean that you can ask the dealer to remove the charges. What’s challenging for a shopper today is that if you don’t want to pay for those items, the dealership will happily wait for the next customer who will.

market adjustment

A market adjustment or markup is essentially a fee that the dealership has drawn up to reflect low supply and high demand conditions. This can range from a few thousand dollars on normal vehicles to up to $50,000 on high-end or limited-production vehicles.

Dealer-Installed Accessories

Common add-ons can include anti-theft devices costing around $800 to $1,500, door edge guards that can range from $400 to $800, and nitrogen-filled tires that range from $90 to $700 if included with a warranty. can. When combined, these items can add thousands to the price of a new car.

For those who are not interested in these additional features, it is not as easy as asking them to be removed, as they are already installed. For example, you cannot remove the ceramic paint coating once it has been sprayed on a vehicle. The deal gets more complicated because you’re now negotiating several fronts: accessories, the price of the car, and maybe even your trade-in.

Tips for dealing with add-ons or markup

Verify Price Hike: If you’ve identified a car you’re interested in, call ahead of time and ask if it has a markup or is equipped with a dealer add-on. If so, find out specifically what the items are and how much they cost.

Cast a wide net: Not all dealerships will subscribe to this “market adjustment” philosophy. Your goal is to find those dealers and shop with them. You may have to cast your net widely out of town or to the dealership in the next county. To find them, try searching online with words like “no markup (brand) dealer in (city or state),” or “dealer over MSRP in (city or state).” Find forum threads where people are discussing this topic.

If you want accessories: Many additional items have some value, have the convenience of being installed already, and have the potential to convert the cost into your car loan. But it’s important to note that you may be paying more – dealerships increase the price of goods by 40%-50% of what they paid for.

Feel free to negotiate: Dealers don’t always expect people to pay the full markup, so if the vehicle you really want has a market adjustment, try to pay half of its cost. The dealer may counter, but it can be a win-win for both parties – you can save thousands of dollars and the dealership still sells the vehicle for well above the MSRP.

Order a car: This option takes patience and planning, but in most cases, the factory-ordered vehicle will not have been marked. You can get the exact car at MSRP provided you are willing to wait. If a dealership insists on adding accessories to a factory ordered vehicle, we recommend purchasing elsewhere.

Edmunds says: At a time when vehicles are scarce, dealerships want to maximize profit on each unit, given that margins on new cars are already low. While market adjustments and additional items can be frustrating and costly for consumers, they are within the rights of the dealership. After all, the “S” in the MSRP stands for “Suggested”.

Author Bio:

This story was provided to The Associated Press Automotive website by Edmunds, Ronald Montoya is a Senior Consumer Advice Editor at Edmonds. Twitter: @ronald_montoya8.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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