Understanding Invoice Prices Beyond MSRP: A Comprehensive Guide

When purchasing a new or used vehicle, many consumers are focused on the Manufacturer Suggested Retail Price (MSRP) and how much they can negotiate below it. However, another critical figure in the negotiation process is the invoice price. The invoice price is the price at which the dealer purchases the vehicle from the manufacturer. This price can be significantly lower than the MSRP and plays a crucial role in determining the final cost of your negotiation. This article will explore the invoice price, its importance, and how it relates to MSRP in the car-buying process.

What is MSRP and Invoice Price?

First, it’s essential to understand the difference between MSRP and invoice price. MSRP, or Manufacturer Suggested Retail Price, is the recommended price at which a dealer should sell the vehicle. It is set by the manufacturer and serves as a guideline for pricing.

In contrast, the invoice price is the price at which the dealer buys the vehicle from the manufacturer. This price includes the cost of the vehicle, taxes, and fees, but it does not include additional costs such as delivery, installation fees, or charges for extended warranties and other accessories.

Dependence on Make and Model

The difference between the MSRP and invoice price can be significant and may vary depending on the make and model of the vehicle. There is no set percentage difference; it can range widely. Therefore, it’s crucial to research the specific vehicle you are interested in to understand this difference better.

Examples of MSRP and Invoice Price

Let’s look at some examples to illustrate the variance:

2020 Chrysler Pacifica Hybrid: Prices can be as low as $300 below the MSRP. 2020 Kia Soul: Prices can be around $700 below the MSRP. VW Atlas SEL: Prices can be around $1,200 below the MSRP. 2020 Volvo XC40: Prices can be around $1,500 below the MSRP.

These differences highlight the variability and the importance of conducting thorough research before entering into a negotiation.

Why is the Invoice Price Important?

The invoice price is significant for several reasons:

Understanding the Dealer’s Cost: Knowing the invoice price helps you understand the dealer’s cost, which can be a powerful tool in negotiations. If the invoice price is significantly lower than the MSRP, you have more room to negotiate. Transparency in Pricing: Transparent pricing helps you avoid hidden fees and ensures that you are getting a fair deal. Guaranteed Savings: If you can lower the price to the invoice price or even below, you are guaranteed to be getting a good deal.

How to Find the Invoice Price

Due to privacy laws, dealers are not required to disclose the invoice price of a vehicle. However, there are several ways to find this information:

Manufacturer Sources: Contact the manufacturer directly to get information about the invoice price for a specific model. Lease Calculation Tools: Some lease calculation tools provide a breakdown of the invoice price. This can be a valuable resource for research. Car Forums and Websites: Websites and forums specialized in car purchases can be excellent resources for obtaining invoicing data from experienced buyers.

Conclusion

While the final deal might not always hit the invoice price, understanding and finding the invoice price can significantly enhance your negotiating position. It’s a crucial factor to consider when determining the overall value of the vehicle and ensuring that you get a fair price.

Regardless of whether you are buying a 2020 Chrysler Pacifica Hybrid, a 2020 Kia Soul, a VW Atlas SEL, or a 2020 Volvo XC40, knowing the invoice price can make a substantial difference in the outcome of your negotiation. Always research and be prepared. Happy car-buying!