New Car Buyers Guide: What is MSRP?

When it comes to purchasing a new vehicle in Canada, the process is relatively simple. You walk into a car dealership, inquire about your favourite models and makes, take some test drives,  and begin the negotiation process to get the best price for your investment.

The conversation typically starts at a price point set by the dealership and from there, the buyer will proceed to explain their budget so that the dealership can find a more suitable price for the both of them. The goal of the dealership is to make maximum profits whereas customers are looking for the best deal for their money. For those that have not gone through this process, this can be a challenging point as to what range you should provide the dealer, which is why understanding the definition of the MSRP and how you can leverage tools such as a dealer invoice price for comparison which can be instrumental to getting a good price.

Keep reading to learn more about the difference between the MSRP and a dealer invoice price:

 

What is MSRP?

MSRP stands for the manufacturer’s suggested retail price, which is exactly what it sounds like. Once the vehicle is manufactured, they put together a list of costs associated with the makeup of the vehicle along with any creative and design aspects. They recommend this price that includes the sales efforts and markup, encouraging all locations to have similar price points so that it can be standardized across the board.

This would be more or less the price that dealerships promote, adding on any discounts or additional markups. Understanding the MSRP is often negotiable will allow you to find the range to start the conversation from.

 

What is a Dealer Invoice price?

A dealer invoice price is a price that the dealership is invoiced for the vehicles that they sell. This is often the cost to the dealership, so a subsect of the MSRP. The amount is the direct materials, labour, and overhead associated with the vehicle and this becomes a charge to the dealership when they purchase them to sell to customers.

It is commonly known that the dealer invoice price often excludes costs that dealerships are able to get out of through incentives such as dealer holdbacks or cash incentives. Keep in mind, those discounts are not shown on the invoice prices that are on the report but for the most part, dealer invoice reports help to show an at-cost version of the vehicle you are looking for which is what you need to begin negotiations.

 

So the difference is…

The difference between MSRP and the dealer invoice price is the profit margin that the dealerships make. They are looking to maximize that as much as possible, but all car dealerships are in the business to make sales so they will negotiate until you are satisfied with the price and they are satisfied with the profit margin.

 

Obtaining a Dealer Invoice Report

With Car Cost Canada, you have the opportunity to get a report that showcases the dealer invoice prices and with the service, certified dealerships are recommended so that you can connect with someone who is ready to negotiate on these terms. Since the report itself is free, you have the opportunity to save money without initially investing anything.

 

Negotiating Strategies

Alongside a dealer invoice report, here are some tips and tricks to help you in your purchasing conversation:

  • Do not be an impulse buyer: cars will not run out, if you want a certain model or make, they will exist a week or a month from now. Take your time so that you make the best decision for your commuting needs.
  • Negotiate up from the dealer’s cost: utilize the dealer invoice report and take away any dealer holdbacks and cash incentives to obtain the dealer’s cost; from there, you can negotiate from an additional 3-5% upwards.
  • Bring someone along: this will provide another perspective and give off the impression that you cannot be intimidated; use your partner to strategically guide the conversation so that the power is in your hands.

 

Have your best foot forward in negotiating for your new vehicle. Do not get blindsided by additional markups or prices by utilizing the tools you have strategically. A dealer invoice report can give you all the information you need to make an informed decision. Contact our team today to learn more about the service and to get more advice.

 

Planning to Buy a Car Online? Here’s Why a Dealer Invoice Report is Your Right Hand Man!

Buying a vehicle in the 21st century is a whole new ball game. With the evolution of the internet, it isn’t at all surprising that you can buy a car online in Canada, simply through a virtual transaction.

All you have to do is visit the dealership’s digital department, ascertain whether your car is in stock by emailing or texting them, book an appointment for a test drive and get a quote on your vehicle of choice. Once you’ve settled on a car after your test drive, you can finance, negotiate and complete the rest of the transaction online. From there, most dealers will deliver your new car to your address.

Seems simple enough, right? But wait. You’re missing a crucial step!

Why Do I Need a Dealer Invoice Report When I’m Buying a New Car Online?

In the above scenario, a dealer invoice report wasn’t used. Therefore, the person making the purchase would have likely paid the full MSRP (Manufacturer’s Suggested Retail Price) and missed out on saving quite a bundle. For instance, the dealer may provide the car to you for $27, 000, however, they paid $24,000 to the manufacturer to own it. This means that the dealership enjoys a profit margin of $3,000, with the buyer of the car being none the wiser.

Complete Transparency – No Catch, No Hidden Costs

This is how a dealer invoice report helps. It starts when you request a free report for a particular model and make. Your report will detail the original price (invoice price) paid by the dealer to the manufacturer. Moreover, when you approach a reputed dealer invoice report provider, you can even access the latest incentives, rebates and certified dealers with absolutely no hidden charges. All of these benefits would ordinarily be closed off to you. With a dealer invoice report, transparency is the focal point.

SAVE on Your New Car While You Access the Latest 2019 In-Car Technologies

2019 promises to debut several innovations in the automotive industry. What will your future car look like? These breakthrough technologies will revolutionize the way you drive.

For instance, using AI like Amazon’s Alexa to interact with your car’s infotainment system, Nissan’s “B2V (brain to vehicle) communication that uses a headband to detect brain waves and prep the vehicle for the action that you intend to make, Ford’s Waze mapping and navigation that gives you real-time crowdsourced data on a delay/backup, and so many other seamless solutions.

How does a dealer invoice report factor in? Not only do you get the best price on your new car, you also get the latest upgrades, technologies and trim levels at the best quotes. The savings you rack up just by approaching the right dealer will make for a very pleasant buying experience.

Compare Offers From All Your Local Dealers!

When car shopping, just as with any sizeable investment, it’s important to consider offers from at least a couple of different dealerships to get a rough idea of what you’ll be spending. You may have to walk away on your first visit, prompting the dealer to provide a more attractive offer. Don’t settle. Shop around until you find one that’s willing to match your expectations.

With a dealer invoice report, besides finding out the vehicle’s wholesale cost, you will also be able to find out what other people in your area have paid for the same make and model. Moreover, the report will recommend only the highest quality dealers that offer irresistible prices.

Be in a Much Better Position to Negotiate

When you approach your dealer, you need a feasible figure, based on which you can begin negotiations. Overshoot a reasonable amount and the dealer won’t entertain you, undershoot a reasonable amount and you’ll stand to lose a tidy sum.

The question is: how do you strike the right balance? A dealer invoice report gives you a good idea of the bargaining figure on which to begin negotiations. Most dealers make a profit margin of about 8.7%. Naturally, you have to negotiate at a quote that’s fair to you and allows the dealer to have some leftover revenue as well. The report gives you a number that works for both parties. It’s best to follow the 3-5% rule. This means, whatever invoice price your report reveals, add about 3-5% to that figure to arrive at your negotiating price.

Free Invoice Reports. Lowest Price Offers. Certified Dealers.

Buying a new car online doesn’t have to be riddled with challenges. With a free dealer invoice report, you can access incentives, rebates, and offers that you can’t normally enjoy. Request your report right here!

Ways to Save Money: New Car Buyers Edition

Purchasing a vehicle is a process a majority of Canadians go through at a point. In a country of approximately 37 million, around 25 million individuals carry a driver’s license. A commonality amongst ready-to-purchase individuals is a precaution to price. Add-ons and longevity aside, a majority fixate on initial cost. The initial cost of a vehicle typically makes or breaks a consumer’s decision to purchase. Consumers are often looking for the best possible price prior to purchasing a vehicle which is exactly what a dealer invoice report does.

Car Cost Canada offers free dealer invoice price reports to Canadians since 1999. With exclusive options to see add-ons, rebates and unique manufacturer to dealer incentives, Car Cost Canada provides bigger advantages to users with invoice reports. Dealer invoice reports allow car buyers to learn the true wholesale cost price that a dealership would be working with, not just the MSRP (Manufacturer Suggested Retail Price).

The average cost of a vehicle in Canada continues to rise, reaching approximately $33,464, up 3.2 percent from the previous year. A large number of consumers are purchasing a vehicle at the MSRP (Manufacturer’s Suggested Retail Price) without knowing that any other options exist. The difference between invoice cost and MSRP can vary significantly. The savings for a basic, economical vehicle may hover around $500-$600, whereas a high-end SUV could see a $10,000 (or 20%) potential profit margin at the MSRP. The margins between MSRP and dealer invoice can save you a substantial amount of money in regards to the initial cost of the vehicle.

Dealer Invoice reports have proven success in the luxury vehicle market as well, gasconading significant savings. Those in the market for a luxury vehicle such as a BMW, Audi, or Mercedes-Benz, can see savings of 20% off the MSRP. With the price of an average luxury vehicle ranging from $56,505; base model sedan to $83,183; mid-size SUV/crossover, the savings can cut a substantial amount off the MSRP. With the price of luxury vehicles axiomatically higher than the price of a basic, economical vehicle, leasing is inevitable for many.

With that being said, those looking to lease can cut back on the length of their terms, meaningless commitment for their vehicle of choice. Keeping the average cost of a vehicle in mind, 71.5% of Canadians opt for a term of 48 months or greater, compared with 71.3% last year. A lower initial cost can cut back both length of the lease as well as the monthly cost of the lease, taking the pressure off of significant long-term financing.

Car Cost Canada offers comprehensive dealer invoice reports aimed at saving consumers money on their vehicle purchases. A vast amount of Canadians purchase a vehicle at full MSRP, missing opportunities to save money. Dealer invoice reports also provide an in-depth breakdown of rebates and incentives that you may qualify for. Items such as rebates for certain vehicle makes because they are eco-friendly is something that you have to initiate and does not automatically apply to you as you are purchasing the car.

When reviewing your dealer invoice report, it is important to understand the invoice price is only “roughly” what the dealer paid for the vehicle. This is due to the dealer holdback amount that most manufacturers assign to the vehicle. The dealer holdback is a portion of the cost that is collected by the manufacturers but refunded by car makers once the car is sold, as a sales incentive. This information will not be shared during negotiation because this is an incentive for the dealer, additional pocket money for them. While this is beneficial, this is not a huge increase in revenue for them. It is normally 4%-7% of the MSRP. The price point will be this dealer invoice report with the additional sales commission that must be made, any overhead costs, and an extra profit from the sale. Taking that into consideration helps buyers understand the value and what point they can negotiate to.

The dealer invoice report boasts a plethora of options and savings pertaining to the purchase of a new vehicle, whether out right or via a financial term. Over 200,000 Canadians have utilized Car Cost Canada’s dealer invoice reports. With savings anywhere from a few hundred to thousands, the accumulated savings relevant to dealer invoice pricing is staggering. Whether you are looking to purchase your first, new vehicle or looking to upgrade your current one, a dealer invoice report from Car Cost Canada makes the purchasing process simple and will ultimately help you save your hard-earned money.

About Car Cost Canada

Car Cost Canada was the first company to offer dealer invoice prices in Canada and we’ve been Canada’s #1 choice since 1999. Car Cost Canada is a division of Armada Data Corporation, a trusted data company that is publicly traded on the TSX.

Over 500,000 Canadians have utilized Car Cost Canada’s services to save money on their most recent new vehicle acquisition. Our website outlines how consumers can save money by knowing the dealer cost of all new vehicles sold in Canada, current unadvertised incentives, and how the Car Cost Canada national dealer network can positively impact your next vehicle purchase.