In Upside-Down U.S. Car Market, MSRPs Have a Whole New Meaning

[Geee]

Bloomberg

(Bloomberg) -- For decades, transactions in car dealerships in America went something like this: A couple walks into a showroom, expresses interest in buying a sedan, the sales rep says, great, our MSRP is $26,000, and the two sides sit down to negotiate the price lower until they settle on a level both can accept.

The MSRP, or sticker price, typically set the ceiling.

Today, in a sign of just how much leverage has shifted from buyers to the carmakers and dealerships, the MSRP sets the floor. Prices only go up from there. Paul Lemieux can attest to this. He searched high and low for a dealership near his home along the Mississippi coast that’d sell him a Hyundai Ioniq 5 electric car at the manufacturer’s suggested retail price of around $47,000. None would. The closest thing he found was one across the border in Louisiana that’d offer MSRP plus a $299 fee to etch the VIN number into the windshield, something he had no interest in. He took it anyways. “There is zero bargaining,” Lemieux says.

To make matters worse, the MSRPs themselves are going up. And by a lot. The average sticker price on a non-luxury car in the U.S. is now $41,500, according to Kelley Blue Book, an auto price researcher. Two years ago, it was almost $37,800. That’s a 9.8% increase -- even before all the new dealer markups kick in. :snip: