What Does MSRP Mean?
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?
Related: More Car Buying Advice
MSRP stands for the manufacturer’s 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 the invoice price on a car, which is what the dealership pays for the car from the automaker and 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 the 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 Deal Gauge on vehicle listings takes the vehicle’s MSRP, features, demand and availability into consideration and gives you an idea of whether or not it’s a fair deal and where to start negotiations at the dealer.
More From Cars.com:
- What Makes Up a Destination Charge?
- What’s the Average Car Payment?
- What Is an APR?
- Buying a Car: Cash, Lease or Loan?
- First-Time Buyers: How Much Should I Spend on My Car?
Related Video:
Cars.com’s Editorial department is your source for automotive news and reviews. In line with Cars.com’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of Cars.com’s advertising, sales and sponsored content departments.
