Buying a car at the dealership has been stressful for as long as that sales model has been in place. The toughest part is when it comes to negotiating the price. Many dealerships just won't do it these days, and the pandemic didn't help matters when prices jumped due to the supply chain delays. But the market is mellowing out, so it's not the same as it was just a year ago. If you go in with some good tips on how best to negotiate (and not get intimidated by seasoned salespeople), then you can be well armed to do what needs to be done. Here's what you need to do in order to get best possible new car price.

What is a Sticker Price?

In case you've been hiding under a rock, we'll fill you in on what a car sticker price actually is. It was coined the “Monroney sticker”, based on Senator Mike Monroney who helped pass the Automobile Information Disclosure Act of 1958, federal law prohibiting the label from being removed or altered prior to the sale of a consumer.

Not only does the Monroney sticker display the MSRP of every new car, but it also includes A sticker price is the vehicle's MSRP (the factory set price), but it also includes every standard and optional feature, along with the destination charge. It does not, however, list the invoice price (the price the dealer pays the manufacturer to have that car in its inventory). The difference between the invoice price and the actual sales price for the consumer is called the markup.

Dealer Mark-Up

The aforementioned markup does not always equate to the MSRP. The dealer can sometimes mark up (with the permission of the manufacturer) the price, largely determined by the demand for that particular model. For instance, if there's a car that's sitting on dealer lots for months, the likelihood that it will be marked up significantly, if at all, is slim. If it's a model that customers are waiting for, that dealer markup could be significant.

The average new vehicle price is coming down, up from a colossal high of just over $50,000 in 2023. Now, it's around $48,000. By comparison, it was about $40,000 back in 2020.Due to the impact of COVID on the supply chain (especially the microprocessor chip supply), new vehicles were not being produced at the same rate as customers and dealers were accustomed do, driving prices up sharply. Markups abounded in the industry then.

In addition to a vehicle's demand, the average markup is impacted by the segment of the vehicle. Trucks are in more demand than hatcbhacks. SUVs are crossovers are more desirable to carbuyers than sedans and coupes.know what you want to buy and understand how that will impact the price of the vehicle you want. If the markups are too much, then consider a different segment that will still suit your needs.

How to Negotiate

Unless you're a masochist, nobody likes negotiating with a car salesperson. Some make it easy by saying you pay the sticker price, no more and no less. But if you're looking to save a little bit of money, prepare to use some important tactics that don't ask for an insanely low price that the dealership would never agree to.

  • Visit the dealership on a slow weekday near the end of the month and near the end of the quarter. They have to meet quote and have more wiggle room during these times.
  • Research the true market value of the car before going in to buy. Understand what people are paying for the car you want. Prepare to negotiate for 3 to 5 percent over the dealer cost. You can visit Kelley Blue Book, Consumer Reports, and Edmund's True Market Value to find the invoice price.
  • Let the salesperson throw the price out first before you do, and then you can work at the negotiation from there.
  • Educated negotiation shows the dealer you've done your research and you're not just asking for a low price. You recognize that they need to make money, and you're not lowballing them.

Don't go based on the monthly payment, something that they'll push you to look at. They will try to extend the length of the loan to bring down the price, and that's a false picture. You'll end up paying more in interest over the life of the loan. Focus on the out-the-door purchase price.