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New car transaction prices hit another record in August as tight supplies meet strong demand for vehicles.
Shoppers are now paying over $46,000, according to J.D. Power, but that’s not just the average Manufacturer’s Suggested Retail Price.
Many dealers have been adding "market adjustments" to help make up for their shortfall of inventory, which can run into the tens of thousands for the hottest models.
Even mainstream brands like Kia and Hyundai have been seeing some of their vehicles sold for 18% over list, according to Consumer Reports, but Edmunds said the average is closer to $700 across the industry.
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Short supplies of cars have driven up transaction prices. (Fox News Digital)
Dealers also sometimes add accessories to cars in stock that can’t be removed, so it’s take it or leave it for interested buyers in a seller’s market.
There are ways to avoid or at least reduce these types of markups, however, according to Edmunds senior consumer advice editor Ronald Montoya.
The new car shortage is expected to continue into next year. (Luke Sharrett/Bloomberg via Getty Images)
First, make sure you know how to spot them. Dealers have to post an addendum on cars that show any added costs that aren’t on the traditional window sticker.
Along with the market adjustment, some things to look for are security systems, ceramic paint coatings, door edge guards and nitrogen-filled tires, which most experts advise are unnecessary for typical cars. The practice was originally used in car racing as the nitrogen controls temperatures in the tire better under high stress.
Dealers are adding market adjustments to new car prices. (Fox News Digital)
Montoya advises shopping around for the same car without the add-ons, even if it means going to another state. He notes that, even if you like the accessories, they will likely be more expensive if the dealer installs them than if you make a purchase after you buy the car.
But while it's hard to get a dealer to remove or drop the price on the accessories, the market adjustment is fair game for negotiation.
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"Dealers don’t always expect people to pay the full markup, so if the vehicle you really want has a market adjustment, try offering half of its cost," Montoya said.
"The dealer may counter, but this can be a win-win for both parties – you might save thousands of dollars and the dealership still sells the vehicle for above MSRP."
"Dealers don’t always expect people to pay the full markup"
For patient customers looking to avoid markups altogether, Montoya says your best bet is ordering a vehicle from the factory instead of buying one off the lot.
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You’ll want to get a purchase agreement to lock in the price if you can, because a dealer can still try to add a markup upon delivery if you don’t have a contract, and will just sell it to the next customer willing to pay it.