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What is MSRP: Manufacturer's Suggested Retail Price

by Autobytel Staff
December 17, 2008

Car buyers are awash in potentially confusing acronyms, and one they will hear over and over again is MSRP. The MSRP of a vehicle is the manufacturer’s suggested retail price, more commonly known as “sticker price.” This is the price found on the data sheet in the window of every new vehicle sold by a dealership in the United States as is required by federal law under the Automobile Information Disclosure Act of 1958 as authored by Oklahoma congressman A.S. Monroney. On very rare occasion -- usually on new limited production models -- the MSRP of a vehicle will not be displayed on the data sheet, but if asked the dealer must provide accurate MSRP information to the consumer.

MSRP was originally developed to even the playing field between retailers by providing consumers with consistent information from dealer to dealer. MSRP is set by the manufacturer and consumers can be assured that the MSRP of two identical vehicles at different dealerships is exactly the same. However, dealers are under no obligation to hold to the MSRP as an actual sale price and may sell the vehicle at, under, or above MSRP. The MSRP is simply a guideline set by the manufacturer so consumers can have a baseline on which to start or end purchase negotiations.

The base MSRP of a vehicle does not include taxes, registration, market adjustments, dealer-supplied add-ons, or other miscellaneous fees. Traditionally, the MSRP of automobiles has been set artificially high. This practice of “padding” the MSRP was done primarily to give dealers additional room for profit and had the side effect of making the car buyer to believe they got a good deal. Recent trends in automobile pricing have caused manufacturers to move the MSRP down closer to actual market value. Manufacturers have found that an artificially high MSRP can be a turn-off for potential car buyers, leaves room for competing manufacturers to set a lower MSRP, and can lead to a brand or model line to be thought of “over priced” in the mind of the consumers.

Car shoppers will note that MSRP may differ site-to-site, or even differ occasionally on the same site. This is because of how MSRP is figured. Some sites, articles, or resources will include the destination charge when showing base MSRP. Other resources may list the destination charge as a separate item. Also, some sources will display base MSRP figures after one or more manufacturer incentives have been applied.

While every effort is made to ensure that MSRP information is accurate and up-to-date, MSRP numbers will sometimes differ.


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