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Do dealers lie about the MSRP?

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Neal

Staff member
RVF Administrator
Joined
Jul 27, 2019
Messages
11,477
Location
Midlothian, VA
RV Year
2017
RV Make
Newmar
RV Model
Ventana 4037
RV Length
40' 10"
Chassis
Freightliner XCR
Engine
Cummins 400 HP
TOW/TOAD
2017 Chevy Colorado
Fulltimer
No
Dealers know most of us know what we're looking for in our discount percentage off of MSRP. The question is can we trust the MSRP number they list? We may be able to get close based on the stock item but when things are specialed then we're in uncharted territory.
 
I don’t believe MSRP relative to their cost. They (newmar and dealers) are making a nice profit. You can never get a dealer to tell you their invoice. I have asked multiple times having bought three coaches and was told no. But I hear from a trusted source in the industry that the margin is significant. Take Girard awnings. They really are expensive but to make them at cost what would you guess, 25 to 50% of the MSRP? Honestly, I don’t know. Don’t get me wrong they are beautiful awnings. There has to be a hefty margin in them so that manufacturer and coach builder and dealer can profit. American capitalism at its best. I too would love to see how they price specials.
 
MSRP is simply what the manufacturer says it is! "Manufacturer's Suggested Retail Price (MSRP)" is basically a myth. It is an artificial number tossed out to establish some kind of starting point. The bottom line is that a fair price is actually what a willing buyer and a willing seller agree upon. Trying to turn MSRP into an absolute number is a fool's errand.

Sheridany's observation that there is a "hefty margin" in products like Girard awnings is spot on. My son is a licensed customs broker in the import-export business. He sees the actual cost of items when doing the paperwork for import/export and is frequently flabbergasted. One example is those fancy cell phones we can't seem to do without. You know...the ones we pay several hundred bucks for. In many cases, the actual cost is less than you'd expect to pay for a hamburger in a fast-food joint.

The retail price of any item is based primarily on what the market will support.

TJ
 
Most people that have not worked in a product manufacturing environment don’t understand is that there is a lot more to the cost of a product than just the actual materials used to produce it. It has to be researched, designed, developed and tested. And, depending on the product, those costs are extraordinary...and have to be recouped in the retail price of the product. It’s a balance between what the consumer is willing to pay, how fast the company wants/needs to recoup those R&D costs, the product life cycle, etc.
 
Excellent points above. What’s interesting is this may be the only industry or I am not aware of another industry where negotiations to buy an RV start as a discount off MSRP on new inventory. I am curious how that came to be the standard basis of price negotiations. I assume this is true across RV types. No doubt 20-25% off MSRP as it seems to be the numbers I read or hear people quote (on class A) is significant and still leaves the dealer a healthy profit on the sale I would presume. It also gives a sense how inflated MSRP is if they can discount in a double digit range makes you wonder.
 
I got a chance to buy a Cadillac DTS back in 2002 new from a friend who owned a dealership (He sold it). I bought it at $500 above his invoice. Let me just say at 20-25% off MSRP, they are still making a lot of money.
 
Be careful with "invoice" prices. We are in the process of buying a new car and the "invoice" I was shown was certainly NOT what the dealer paid for the car! There are "invoices" and then there are "invoices."

TJ
 
Be careful with "invoice" prices. We are in the process of buying a new car and the "invoice" I was shown was certainly NOT what the dealer paid for the car! There are "invoices" and then there are "invoices."

TJ
I do understand that. :) And dealers get incentives off the Invoices/Invoices. LOL. I got to see the bottom dollar invoice/invoice/after incentives invoice. LOL
 
For automobile dealers there is also "Hold Back" which is paid to dealers on units sold when certain metrics are met. The invoice is a base number but dealers still make money even selling at invoice due to various incentives they are paid by the MFG like Hold Back. What Is Dealer Holdback? on Edmunds.com
 
A couple of comments about this!

I spent 40 years in the automobile industry, most in management positions, but was a Dealer Principal for 2 years. So some of what I say is based on actual "been there, done that" experience.

RV MSRP.....When building my new Canyon Star from the "Order Sheet", the MSRP was shown at the top of the sheet. For each optional item, there was a code, description, & MSRP. This form is a NEWMAR form, printed off by the Dealer from the Newmar Dealer Portal. Was it truly MSRP? I don't know 100%, but think it was the actual MSRP, as priced by Newmar. The "Specials" were done on a different sheet, and I saw nothing that suggested "MSRP". All I saw was an individual price on each special item. I assume it was the Dealers cost for that special from Newmar.
I negotiated my price, then negotiated the "CPU" price I paid. When paying for the coach just prior to going to Napanee; I was trying to get the "CPU" fee deducted from the total price, to save paying tax on it. I was told by the Manager doing the paperwork, that the CPU charge was included as part of the "cost of the coach" from Newmar. He went on to show me that line on the invoice. While looking at it, I did see the "Total Amount Due" line, and the difference between that & what I paid was $5600. So, I felt as if I got a pretty good deal. And that the Sales person with which I dealt, had been honest with me. He had said that it was between a $5,000-$6,000 deal, so I'd say he was accurate. Dealer made about 3.7% profit for its' efforts in securing & placing order, and doing paperwork. They had no delivery expense, which it is my understanding in the RV Industry, that the dealer pays for separately. A good deal for me, an easy deal for them!

Now, MSRP in the automobile industry. Each vehicle is required by law to have a "Monrony" label stating the MSRP. This is comprised of the base price, price of all optional equipment, freight (delivery expense), any manufacturer discount, then the total MSRP. Two identical vehicles will have an identical MSRP, other than California Emissions. There is an "Invoice Amount", which actually is the amount the Dealer pays the Manufacturer for that vehicle. Is that the "net cost" to the Dealer? No! There is a "holdback" amount, usually 3%, that is calculated, and shown. The Dealer, depending on the program he selects, will get that money Quarterly, Semi-Annually, or Annually! So, the net cost to the Dealer, is Invoice less Holdback! But, to give Dealers incentives to move certain Models, etc, there are available, "volume bonuses" (as specified by the Manufacturer), Quarterly, & Annual Sales Objectives that can be attained by the Dealer; but that amount is not known until the end of the Incentive program! Most people won't believe it, but "Net Profit" in a Dealership will run 1-1 1/2%. If a Dealer can run a 2%Net Profit he is doing an exceptional job!
And the ultimate price paid by the Consumer depends on the Dealer's actual selling price, coupled with whatever Manufacturer's Incentives are available on a particular model! Hope this helps!
 

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