82% of Car Buyers Paid Above Sticker Price in January

82% of Car Buyers Paid Above Sticker Price in January

Dealerships hike up new vehicle prices amid inventory shortages
new car owner receiving keys

Just a year earlier, less than 3% of car buyers were paying above the manufacturer's suggested retail price (MSRP) — but as of January, that figure had skyrocketed to 82%.

According to new data from auto shopping and information site Edmunds, the days of paying below MSRP are over, at least for the foreseeable future. Most buyers are now paying more than $700 over the sticker price, and it’s not uncommon to now pay thousands of dollars above MSRP for certain brands. In some cases, auto manufacturers have even publicly called on their dealers to stop raising prices.

Car price hikes accelerate

According to auto pricing guide Kelley Blue Book, the average new car sold for more than $47,000 in December, marking an increase of more than $6,000 from the prior year.

Low inventory and high demand — amid a high inflationary environment overall — have led to 82.2% of purchases coming in above the manufacturer’s sticker price. That level marks sharp, exponential growth from just 2.8% of purchases topping MSRP in January 2021, itself a massive leap from January 2020’s 0.3%.

The actual dollar figures are similarly dramatic, with an average transaction price of $728 above MSRP last month, compared to $2,152 below MSRP in January 2021 and $2,648 below MSRP in January 2020.

In response, manufacturers Ford and General Motors have publicly asked dealerships to stop charging over MSRP.

Ford CEO Jim Farley, for instance, told dealerships his company would offer them fewer cars if they continued to participate in price hikes. And according to Jessica Caldwell, Edmunds' executive director of insights, "there are clearly some other automakers who might want to follow suit."

Of the carmakers whose models saw the highest average markups in January, GM’s Cadillac led the pack by a large margin. The top five brands in terms of pricing above the MSRP were…

  1. Cadillac ($4,048)
  2. Land Rover ($2,565)
  3. Kia ($2,289)
  4. Porsche ($1,721)
  5. Acura ($1,701)

On the other side of the coin, the most discounted brand sold in January was Alfa Romeo (-$3,421), followed distantly by Volvo (-$869) and Lincoln (-$510).

How to get a better deal

While 2021 record-high car prices, Edmunds says that 2022 still is not the best year to buy.

"Consumers might be waiting up to a year or longer if they want to hold off until the market resembles anything close to the pre-pandemic normal," says Ivan Drury, Edmunds' senior manager of insights.

For those who do plan to buy, Edmunds recommends…

  • being flexible on which type and model you want
  • searching widely, including online
  • negotiating on price
  • considering a trade-in
  • acting quickly once you find the vehicle you want

You can also look into used cars, with private sellers usually offering the best deals — check out our guide to this kind of auto purchase.

Methodology: Edmunds leveraged its own vehicle-transaction data to look at average transaction prices vs. average MSRPs on a brand level and industry level during January 2022. It then compared that to the same Edmunds data from January of 2021 and January of 2020.