The internet has empowered car buyers but some dealers are finding new tricks to keep the cards in their favor. One that has been popping up recently is inflating the advertised price of the car in order to make their discount look better than it really is.
I got a note from a reader who was concerned that her friend got hosed at a dealer due to a big markup on a car that she didn’t catch at first.
“I was wondering if it is legal for dealerships to start their sale price above the vehicle’s MSRP? My friend went to this dealership and they started their sale price $5000 [above] their website’s listed MSRP for the vehicle. She negotiated down $8000 and thought it was a good deal. A day later, she realized the MSRP for the vehicle was actually less than what the salesperson started at. Is that illegal? If it is, what are her options?”
To answer to the first part is that this is totally legal. Remember, MSRP stands for Manufacturer Suggested Retail Price, with the key word there being “suggested.” Dealers can charge whatever they want for a product, and we have seen this in action with hot cars like the Dodge Demon and the Honda Civic Type R. But someone that isn’t familiar with the market for performance or specialty cars might not be on the lookout for a dealer markup.
I shop for cars every day and this trick almost slipped by me recently. I got this quote from a dealership on a 2018 Civic LX.
At first glance, I was like “Hey, $3300 off a base Civic is pretty strong.” Then I took a look at that “market price” again and it seemed a bit high. So I went to Honda’s website and configured a new Civic LX sedan.
That MSRP of $20,635 is a bit lower than $22,180. So where did the extra $1545 come from? It turns out this dealer pads in an overpriced accessory package into their “market price” which makes that $3300 discount really $1,755, which isn’t bad, but not awesome either.
As for the buyer that thought she got $8,000 off her car only to find out that is not the case, now that the contract is signed and the deal is done, this buyer doesn’t really have any options.
That being said even though she didn’t quite get an $8,000 discount, $3,000 off the sticker price doesn’t seem all that bad. It may not be the best deal in the world, but I don’t know if it would qualify as “ripped off.” Of course, if she feels her experience at the dealership could have been better she can respond accordingly on one of those surveys.
However, the next time you are car shopping and getting quotes online, be sure that the dealer’s advertised price is in-line with the actual MSRP and question any discrepancies.