New-car sticker price: Only suckers pay it

The baseline for buying a new car is the MSRP -- manufacturer's suggested retail price -- but many experts say it can also stand for Mostly Suckers Really Pay.

It's also known as "sticker price" for the Monroney sticker that is on all new cars for sale by law -- and has been since 1958 when U.S. Sen. Michael Monroney introduced a bill that was made into law that would show the manufacturer's suggested retail price, transport charges and accessory prices. Only the purchaser of a new car can remove the MSRP sticker.

The rule of not paying full sticker price does have its exceptions. You might find yourself doing just that when you just have to have a really hot new model that's recently hit the market. In fact, you can even pay above the MSRP in these cases and not be the victim of a dealer rip-off. This was true when the Mini Cooper and the PT Cruiser were first introduced and with some high-end luxury cars. It happens when the economics of supply and demand come into play: High demand and low supply mean hardly any dickering on the price. The best way a buyer can ensure he is not being overcharged by one dealer is to check with a few dealers on the model.

Most don't pay MSRP
However, in most new-car purchases, the MSRP price is going to be a good deal above what most people actually pay for that car. It usually falls somewhere between the invoice price -- what the dealer supposedly paid the manufacturer -- and the MSRP.

"It's useful as a conversation starter between customer and sales person," says one dealer who wished to remain anonymous.

"People are lining up to buy the Ford GT coming out next year for $150,000," says Marty Padgett, editor of thecarconnection.com. Only three are being produced in 2003 with about 1,000 more to be made the following year to be spread across Ford's 3,500 dealers, if Ford executives and dealership owners don't buy them up first for their own use.

Some carmakers, such as Saturn, make sticking with the sticker price a marketing tool, advertising that they won't negotiate on MSRP prices to provide its customers with no-hassle buying. But experts say it's worth a try any way, even though it is manufacturer policy.

Jack R. Nerad, author of "The Complete Idiot's Guide to Buying or Leasing a Car," says, "Only you and your therapist know if you're the type who pays the full MSRP because you just don't like negotiating with the dealer."

Most automotive purchasing experts agree.

The MSRP sticker can be a foe to the uninformed and indecisive purchaser and a boon to the buyer who does his homework before taking a step on the car lot.

Sticker tells it all
The MSRP sticker has more valuable information on it than just the base price plus the dealer preparation and transportation charges from manufacturer to dealer. While the dealers often insist neither is negotiable, the transportation charge usually is not debatable, but the prep charge can often be negotiated out. The MSRP usually has the mileage per gallon expected in city and highway, along with engine and power train specifications.

It lists the standard equipment included in the base price and the options and corresponding costs added by the manufacturer on that particular car. It's important to remember, however, that what is standard on some higher-end models might be costly options on less expensive models by the same manufacturer -- even on the same type of car. By visiting a manufacturer's Web site, a potential buyer can not only view model, price and option information, but usually be enabled to enter a ZIP code and be transferred to specific dealers in his area where he can see what specific autos are available on the lot and even pull up the MSRP on each vehicle on the lot. Most sites also offer cost comparisons and give you an opportunity to "build" the car of your choice from the base model you want with all the features you want.

Few of his customers pay the full MSRP, admits Berrong Kimsey, general manager of Jacky Jones Ford near Cleveland, Ga., the home of Cabbage Patch dolls.

"I don't know how the sticker price got deflated," says Kimsey. "Probably one dealer really had to move some models quickly, cut his MSRP dramatically and the dealer across the street followed suit. Pretty soon, everyone was doing it."

Kimsey notes that people won't balk at paying list price and big profit mark-ups for groceries or furniture, but will rebel at paying an 8-percent profit mark-up on an auto, which he figures is an average for the difference between invoice and MSRP. On his Web site, Kimsey not only lists the MSRP of each car in his inventory but also the invoice amount. "Other sites on the Internet list them, so we might as well make it easier for the customer."

Rod Gibson is a freelance writer based in Georgia.

-- Posted: Dec. 9, 2003