What Is The Average Car Dealer Markup Fee?

By

Managing Editor

As CarsDirect’s resident pricing expert, Alex offers must-know analyses of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured by The Wall Street Journal, Fox Business, Motor Trend, Automobile Magazine, and more.

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, Managing Editor - March 31, 2022

The average dealer markup fee on a car is typically determined by local pricing and demand. In normal circumstances, cars & trucks can be purchased for MSRP or less, especially with the help of manufacturer incentives. However, you may encounter cases in which limited availability can require paying well over MSRP.

In 2022, a chip shortage has resulted in more consumers paying markups. According to the website iSeeCars, the average markup fee is $3,753, or 9.9% over MSRP. In the most extreme case, Jeep Wrangler buyers are reportedly paying as much as a 26.7% markup over MSRP, or $8,925 in the case of the 2-door SUV.

A dealer markup shouldn't be confused with the dealer's average profit on a vehicle. Most new cars have a dealer invoice price and an MSRP, and the margin between these prices helps determine how much a dealer makes on a car. Marketing fees, dealer holdback, and other factors can impact a dealer's cost.

The only real way to know the average price for a car in your area may be to check prices with multiple dealers. While online sites — including CarsDirect — do offer estimates and insights into what prices buyers are paying, your local dealer will be in the best position to tell you what the car you want is selling for.

Models that we find often have a markup include the Chevy Corvette, Honda Civic Type R, Hyundai Palisade, and Kia Telluride. However, markups could be especially severe in the event of an inventory shortage. In some cases, this can result in models like the Toyota Corolla having as much as a 23% markup.

These market adjustments may have lasting impacts when considering the fact that automakers are offering longer loan options. For some buyers, it could make sense to pay MSRP for a car. Under normal circumstances, consumers are able to negotiate the selling price of a car whether they're buying or leasing.

Fortunately, there are ways to avoid paying a dealer markup. Taking advantage of incentives can help ensure you get the best deal possible, especially when taking advantage of loyalty discounts and bonuses when coming from a competitor. We recommend exploring all your options to get the best price possible.

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, Managing Editor

As CarsDirect’s resident pricing expert, Alex offers must-know analyses of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured by The Wall Street Journal, Fox Business, Motor Trend, Automobile Magazine, and more.

Follow On: Twitter

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