Many Online Tools to Determine Best Price for a NEW Car or Truck

When shopping for a new car or truck in the Oklahoma City metro area, how do you know whether the dealer is asking a fair price or trying to rip you off? And how do you know you are getting a square deal on your trade-in?

Five Internet tools for pricing new vehicles are described below. First, though, let’s define two terms used by these auto-pricing services:

• MSRP: Manufacturer’s suggested retail price; the price the automaker suggests that dealers charge for the new car; the “sticker price.” The MSRP is a guideline, not a mandate. The MSRP is usually about 10% to 15% above the dealer invoice price.
• Dealer invoice (factory invoice) price: The price the manufacturer charged the dealer for the vehicle. However, the invoice price is not necessarily the dealer’s actual price because of other factors in the manufacturer’s agreement with dealers, including “dealer holdback” (an amount the manufacturer pays the dealer for each car sold) and other dealer incentives. There is typically about 10% profit for the dealer built into the invoice price.

Trying to strip all dealer profit out of a car deal is unrealistic. The dealer invoice price is a good target when negotiating a new car. An offer of 5% above the invoice is a good offer that many dealers will readily accept.  You should also consider things like depreciation and replacement value of the truck in the event of an accident.

FIVE ONLINE AUTO-PRICING TOOLS FOR NEW CARS

In comparing these tools, we checked for listings for a four-door 2015 Toyota Camry Sedan LE with no unique options.

1. Kelley Blue Book:

Believe it or not, the Kelley Blue Book has been around since 1926. Kelley was purchased by AutoTrader.com in 2010, but the service continues to operate under the Kelley name. In 2013, Kelley Blue Book expanded into China.

Kelly listed the following prices for our new 2015 Toyota Camry:

• MSRP: $23,795.
• Dealer’s invoice: $21,883.
• Fair Purchase Price (based on recent transactions “in your area” for similar vehicles): $21,360.

2. NADA Guides:

NADA is the National Auto Dealers Association. NADA listed these prices for the new Toyota Camry:

• MSRP: $23,795
• Dealer’s invoice: $21,842.

Some observers say NADA Guides’ prices favor the dealers — as might be expected since the dealers’ association runs the service. However, as you can see, in our test case, there was very little difference between Kelley and NADA.

3. Edmunds.com:

Edmunds was founded in 1966. When the Internet emerged in the early 1990s, Edmunds was among the first businesses to begin redefining itself for the Internet age, posting auto information on the Electronic Newsstand in 1994 and launching Edmunds.com in 1997.

Here are the prices Edmunds provided for the 2015 Toyota Camry:

• MSRP: $24,803
• Factory Invoice: $22,648
• Average Price Paid (based on actual recent transactions “in your area”): $22,665

As you can see, Edmunds’ listings for the Camry are about a thousand dollars more than Kelley and NADA. I triple-checked to find a difference in how my Edmunds search was configured, but I couldn’t find an explanation. Then I did a Google search, but all I found were discussions of why Edmunds is usually lower. Interesting.

4. TrueCar.com: www.truecar.com.

I was not impressed with TrueCar.com, as you will see from my comments. Here are the prices TrueCar listed for the 2015 Toyota Camry:

• MRSP: $24,085
• Average paid (based on actual recent transactions nationwide): $21,964.
• TrueCar estimate: $19,869.

Notice that the “average paid” is based on recent transactions nationwide, unlike Kelley’s Fair Purchase Price and Edmund’s Average Price Paid, which are based on transactions in your area. Unless you are willing to travel to another state to get an exceptional deal on your purchase, all you want to know are prices in your local market area.

Regarding the site’s “TrueCar estimate,” I could not find an explanation of what that is or how it is calculated, so that number is meaningless to me.

To get additional info, such as the dealer’s invoice price, TrueCar.com requires that you provide an email address and set up a free account with a password.

5. Cars.com: www.cars.com.

Cars.com is, first and foremost, an automotive classifieds site. It is owned by Gannett, the nation’s largest newspaper company. It was launched in 1998.

Cars.com listed these prices for our 2015 Toyota Camry:

• MSRP: $23,795
• Dealer’s invoice: $21,842
• Smart Target Price: $22,187.

Cars.com says its Smart Target Price results from quite a witch’s brew: “a complex proprietary formula” of “diverse and distinct data sources,” including the MSRP, invoice, market demand, and availability.

As you can see, the MSRP and Dealer’s invoices are similar to those Kelley and NADA Guides listed. As a matter of fact, the numbers are exactly the same ones NADA lists (maybe not a coincidence).

Comparing All Five – and My Conclusions

Here is a chart of how these 5 sites stack up:

After spending a lot of time interacting with all five of these websites, here are the two conclusions I have drawn:

* The most valuable data point is the one about which there is the least mystery: The dealer invoice price. As I discussed at the start of this article, the dealer invoice is an excellent place to start when shopping for a new car. A dealer invoice is a solid number that a dealer cannot deny or explain away.

* For whatever reason, Edmunds’ dealer invoice price is almost a thousand dollars more than the other three sites. That makes me leery of using Edmunds.

* What real value do these recommended prices provide? The above four recommended prices range from $21,360 to $22,665. That difference is $1,305—6% of the dealer invoice! Which one is right? Who knows! What good are those numbers when you are negotiating with a dealer?

* If you want a second number in addition to the dealer invoice, I think a much better strategy is to research what your car is selling for in your local market. For more info, see: “Online Tools to Compare Actual New and Used Car Prices in Oklahoma City.”