June 2023 update:
If you haven't shopped for a new or used car in the past few years, you may be in for a rude awakening. A perfect storm of a worldwide pandemic, supply chain issues, a semiconductor chip shortage and vehicle shortages has drastically changed the auto market since 2020. Where there were once markdowns, markups began to appear. It's still not uncommon to pay over MSRP, and big discounts remain rare.
According to Edmunds data, the average discount off MSRP in May was $616. Compare that to the same month in 2019, in which the average discount was $2,573. Today's discount rate may not sound like much, but the good news is that things are heading in the right direction. Just last year, people were paying upward of $700 over MSRP.
This seller's market means that shoppers don't have much leverage to get the deals they once did. These days, if you don't like the price you're being offered, salespeople know that there will likely be someone else who will pay that price.
That said, there are some brands that are offering more discounts than others. As of May 2023, brands that were offering the greatest discounts were Alfa Romeo, Volvo, Ram, Infiniti, Buick, Audi, GMC and Mercedes-Benz.
On the other end of the spectrum, popular brands such as Kia, Honda, Toyota, Dodge and luxury brands such as Land Rover and Cadillac had average transactions that were over MSRP.
If you want to buy a new or used car sometime this year or potentially through 2024, you'll need to reset your expectations for what a "good deal" is. A few hundred off the sticker price might be considered a good deal in the current market. Similarly, if you manage to find a dealership that is selling the vehicle at MSRP while others are asking for more, you should consider that a win.
In either case, it's always a good idea to shop around and compare prices. Just be prepared to cast your net farther to see what other dealers are charging for the same vehicle. Dealer websites may only list the MSRP, which is why we recommend contacting the dealer directly to determine if there are any markups or unwanted dealer-added accessories. If all you find in your area is a glut of marked-up new cars, stay the course and know that even inflated prices may still be negotiable.
The article below was written when the market was much more stable and predictable. Dealerships were flush with cars and were often willing to negotiate for a larger discount. Since that is not currently the case, there may not be much wiggle room for much negotiating. That said, the current situation is unlikely to persist indefinitely. The strategies below can still be helpful for anyone shopping today.
For many people, the thought of negotiating with a dealership car salesperson fills them with dread. This feeling is partly because people see negotiating as confrontational, and they would prefer not to haggle. But with a change of perspective and a few simple negotiation tips, you can potentially save thousands of dollars off the sticker price when you buy your next new or used car.