If you’re in the market for a new car, be prepared for the possibility of paying more than sticker price.
The average new-car price in February was $45,296, compared with the average manufacturer’s suggested retail price, or MSRP, of $41,637, according to new research from iSeeCars.com.
An estimated 31% of new vehicles were sold above MSRP last month, according to a joint forecast from J.D. Power and LMC Automotive. That’s down from a high of 48% in July.
On average, new autos are priced 8.8% above MSRP, according to the iSeeCars report. While that’s down from a peak of 10.2% in mid-2022, each of the 10 models with the biggest difference has an average price of at least 20% above its MSRP.
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“The manufacturers keep raising their prices and then the dealers raise them again,” said Karl Brauer, executive analyst at iSeeCars.
“The difference between dealer pricing and MSRP should continue to fall as the supply chain improves, though getting back to MSRP for most models may not happen this year,” Bauer said.
The biggest premiums paid are for luxury vehicles
As for which cars are priced the most above MSRP: Most of them are luxury models, according to the iSeeCars study.
Coming in first for the highest premium is the Genesis GV70, whose average price of $56,476 is 27.5% above an MSRP of $44,299.
That’s followed by the Jeep Wrangler, priced at $44,396, which is 23.9% above its MSRP of $35,827. The Jeep Wrangler Unlimited is the only other nonluxury vehicle in the top 10, with its price of $55,347 being 21.9% above an MSRP of $45,386.
Of course, not all cars come with a huge price premium.
For instance, the Chevrolet Silverado 1500 comes with an average price of $50,116, which is 1.9% below an MSRP of $51,103. The Malibu — also a Chevrolet — is priced at $27,887, just 1.1% above the MSRP of $27,597.
‘Leverage patience’ to find a deal
In addition to rising prices for new cars, interest rates have been climbing steadily over the last year, which makes financing a car more expensive.
The average interest rate on a new-car loan is 6.3% for 60 months, according to Statista. That’s up from about 4% a year ago. Monthly payments average about $722, according to the J.D. Power and LMC Automotive report. That’s $59 higher than a year ago.
While these prices might seem prohibitive, buyers who take some time to shop around may be able to find a car whose price is more palatable.
“If you have the time to look for deals, or go further away than your local dealership, you may be able to find a deal,” said Joseph Yoon, consumer insights analyst at Edmunds.
“It’s when you need a car right away that you run into problems, because you can’t leverage patience,” Yoon said.
Additionally, it’s worth considering more than one model.
“If you can identify multiple models that will serve your needs, you will be in a much better position than if you’re fixated on a specific make, model, color and option package,” Brauer said.
“It’s easy to fall in love with a single vehicle, but most consumers, if they are being honest, understand that more than one model will cover their car needs,” he added.
(With Inputs from cnbc)
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