CARS.COM — It’s a four-letter abbreviation you don’t need to be a car shopper to have seen, but paying attention to what it is means a lot more to your wallet with a vehicle than it does with a cheese grater. So what is the definition of MSRP, and what does it mean on a new car?
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MSRP stands for the Manufacturer Suggested Retail Price — also known as “sticker” price — which is a recommended selling price that automakers give a new car. A dealer uses the MSRP as a price to sell each vehicle; it’s different from invoice price on a car, which can stand thousands below the sale price.
MSRP isn’t a set-in-stone figure — hence suggested retail price — and you can often negotiate the selling price to influence your car’s out-the-door cost. In turn, dealers aren’t obligated to sell a car at this price, either, and depending on demand and availability of the vehicle in question, they can adjust their selling price. When dealerships mark up a hot new car, it can sometimes inflate the cost above MSRP. The manufacturer usually frowns on this practice, but that hasn’t stopped car dealers from occasionally setting the sale price for a new car that’s in high demand — particularly one with an enthusiast following — at thousands above MSRP.
You might ask, “Then what should I pay for the car?” Cars.com’s Smart Target Price takes MSRP, invoice, demand and availability into consideration and will give you an idea of where to start negotiations at the dealer. We list the Smart Target Price in our Side-by-Side Comparison tool.
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