What is MSRP?

If you're in the market for a new Buick or GMC, you may be wondering, 'what is MSRP?', and 'what does MSRP mean?' MSRP stands for Manufacturer Suggested Retail Price, and it is the price that the manufacturer recommends that dealerships use as a list price for the vehicle. The auto manufacturer determines the MSRP based on current market information and the cost of manufacturing. Learn more about what MSRP means, how it's determined, and much more from North Bay GMC.

What Does MSRP Mean?

The Manufacturer Suggested Retail Price, or MSRP, is a suggested price for dealers to use when selling a vehicle. Most drivers will only see the term MSRP when shopping for a new car, and it's often seen with other standard automotive terms like base price, invoice price, etc. Each of these terms helps to establish the MSRP to the car buyer and the dealership. Below, we answer the question, "What is MSRP?" and more.

• The same vehicle model should have the same MSRP across all dealerships in the USA because the auto manufacturer sets it.
• While the MSRP is the same for each vehicle of the same model, it won't be the same for every car that the manufacturer sells. For example, SUVs have a different MSRP than a coupe or pickup truck.
• Any car shopper can find the MSRP on the manufacturer's website or the dealer's website and are welcome to use it as a tool when negotiating the purchase price of a new vehicle.

How is the MSRP Set?

Now that we've answered the question, "What is MSRP?", let's cover how the manufacturer determines the MSRP. The automaker uses manufacturing costs, sales processes, and average markups by dealerships with live and historical market information to determine a vehicle's MSRP. Read below for more information on how an MSRP is set:

• The MSRP sets a vehicle's base price at its entry-level configuration without upgrades, additional features, or any accessories. 
• While the auto manufacturer suggests the MSRP, it's not necessarily the price the dealership will use when they sell the vehicle. 
• Depending on the vehicle's invoice price (the price the dealership paid for the car), the dealer can raise or lower the car's price as needed.
• Demand also plays a role in the price of a car. A popular model will most likely sell at a price closer to the MSRP than a less popular model

How Do I Get a Fair Price?

The MSRP is only the price the automaker recommends for the car, but it's not the price you must pay for it. Sometimes the difference between what the dealer paid for the car and the MSRP is several thousand dollars, which means that the dealership will make a profit even if you purchase the vehicle at a price lower than the MSRP. These are some helpful car buying tips:

• Do your research by checking what other drivers in your area have paid for the same model on websites like Cras.com, Edmunds, or Kelley Blue Book
• Start your negotiation below the MSRP, and work your way up from there. Remember that upgrades and any additional features you want will increase the price you pay. 
• Some dealers may let you see a car's invoice price if you ask them for it. However, they are not obligated to show it to you. The invoice price can help you decide where you start your price negotiation.
• Shop around until you find the best possible price for you want for the vehicle.
• If you plan to lease a car, you can still negotiate the MSRP since the price you and the dealership agree on will help set your monthly car payment.