Premium on new vehicles remains
Average dealer markup is nearly 10% over MSRP, although the gap is shrinking
Before the pandemic, the Manufacturer’s Suggested Retail Price or MSRP pasted on the windows of new cars and trucks was more of a suggested price, a ceiling a buyer would negotiate lower with the dealer. For many models, it has now become the ground floor entrance to an elevator that goes higher.
The online car shopping portal iseecars studied more than 12 million new car listings from February 2022 through February 2023, comparing the MSRP to the average list price of new cars to see what premium, if any, dealers were demanding.
In metro Denver, it found that new cars were selling for 9.5% more on average than the sticker price on the window, a bit higher than the 8.8% premium averaged nationally. In dollar terms, Denver buyers pay on average $4,117 more than the MSRP.
“The manufacturers keep raising their prices and then the dealers raise them again, to the point where the average new car is priced above $45,000,” said Karl Brauer, executive analyst at iseeCars, in comments included with the study. “There’s no denying it — new cars are expensive!”
The 9.5% markup represents an average and several popular models command higher premiums.
In metro Denver, the Jeep Wrangler has the highest premium at 29.9%, or $11,053, and the Jeep Wrangler Unlimited was third with a 25.3% premium worth $12,194. Between them was the Genesis GV70 SUV from Hyundai’s luxury line carrying a 27.6% premium, which added $11,838 to the MSRP; and in fifth place was the related Genesis GV80 with a premium of 23.7% or $13,332.
The other model to make the top five list in Denver was the Mercedes- Genz GLB, which carried a 25% premium that translated into a markup of $10,346 above the sticker price.
Nationally, the average dealer price on a car was $45,296 in February, up from $42,551 in February a year earlier. But Bauer said it appears that the average MSRP peaked in January and that the gap between MSRP and dealer price has been shrinking since July 2022, when it was 10.2%.
“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,” said Bauer.
A few models are selling for close to sticker price for those who can’t stomach paying a premium. Those include the Chevrolet Silverado 1500, the Volkswagen Arteon, the Cadillac LYRIQ, the INFINITI QX80 and the GMC Sierra 1500, according to the iseeCars study.