Things look bleak for those looking for a deal in today’s hot auto market. In January of this year, we saw reports that 82% of US buyers were paying more than MSRP for a new car, and according to data provided by Edmunds, the highest average markup of $4,048 was seen at Cadillac dealerships. What we didn’t know at the time was which models topped dealer profit margins. Now, thanks to a study that just came out iSeeCars, We do. Well… there’s not a single Cadillac in the top.
Let’s take a look at the list. It is numbered from top to bottom and includes make and model, stated percentage of MSRP, and stated dollar amount of MSRP. Remember these are averages so your nearest dealer may be higher or lower than what you see here.
- Jeep Wrangler | 26.7% | $8,925
- Ford Maverick hybrid | 25.0% | $5,601
- Porsche Macan | 23.3% | $13,254
- Jeep Wrangler Unlimited | 22.9% | $9,534
- Jeep Gladiator | 22.5% | $9,824
- Ford Maverick | 22.2% | $5,368
- Lexus RX450h | 21.0% | $10,365
- Ford Bronco | 20.6% | $7,783
- Genesis GV70 | 20.0% | $8,611
- Mercedes-Benz GLB | 19.8% | $7,992
- Chevrolet Corvette | 19.3% | $15,218
- Ford Mustang | 19.1% | $6,941
- Mini countryman | 18.9% | $6,325
- Lexus RX 350L | 18.6% | $9,242
- Mercedes-Benz GLA | 18.6% | $7,142
The same report of iSeeCars suggests that the average price of a new car is currently 9.9% above MSRP, which equates to an increase of $3,753 over the sticker the car came with.
If you try to compare the data reported in January by Edmunds and this latest information from iSeeCarsNote that Edmunds tracks average transaction prices and categorizes results by brand while iSeeCars tracks the prices at which dealerships have cars listed and categorizes them by model. These are very different things. For example, some dealerships may include optional services that may add to a markup that savvy buyers may refuse to pay, resulting in a transaction price that is lower than the listed price. Some dealers may apply a markup across the entire line, while others may only add markups to the most popular models. In other words, there may still be a little wiggle room, and your conclusions will surely vary from dealer to dealer.
Whichever way you slice it, however, the days of expecting big discounts and heavy bargaining may well be over, at least for the foreseeable future. These two studies indicate that the majority of buyers pay a little more than the sticker for the vehicle of their choice.
Looking at the actual data above, it’s clear that off-road vehicles are currently in demand, despite gasoline prices being higher than they’ve ever been (regardless of inflation, that is). The Jeep Wrangler tops the list, and the four-door Wrangler Unlimited isn’t far behind. The Jeep Gladiator also appears a few points above the Ford Bronco. This is all somewhat surprising, given that the Bronco is a newer vehicle with pent-up demand from Ford enthusiasts.
Hybrid vehicles are also in demand, which is not surprising given the gasoline prices mentioned above. Hybrid versions of the Ford Maverick and Lexus RX are apparently a hot commodity. The rest of the list is populated with in-demand crossovers and sports cars, which makes sense.
What should you do about it? “Shortages of new cars are expected to persist due to the backlog of demand, and the Russian-Ukrainian conflict has led to factory closures and higher raw material prices,” says iSeeCars Executive Analyst Karl Brauer. “The best way to avoid paying more than the sticker is to widen your search radius and consider similar vehicles that may not have the same degree of price premium.”
It’s not all bad news. If you’re absolutely unwilling to pay for a sticker or more, some vehicles are selling at a discount, albeit at much lower discounts than buyers were getting a few years ago.