Bucket o' Bolts

The first car I ever bought -- with the assistance of my folks -- was also the only new car I have ever bought. The three successive vehicles to bear the label "Friarmobile" -- all Toyotas -- were purchased used. Which means I've not had to care for a long time about the fact that there's a whole lot that goes on in selling and buying a new car that's just flat-out icky.

Among those things is the fallacy behind the idea of "manufacturer's suggested retail price" or MSRP. Nearly every car commercial you will ever see offers new wheels at some significant number below MSRP. It helps create a sense of urgency for the buyer. The way the number gets used, one would believe that it's something the carmaker came up with that represents the cost of building the car, plus some profit margin. Therefore, sales that throw out such figures have to be very limited time offers, because otherwise no one would make any money and the dealer and manufacturer would go out of business.

Of course, most folks pay zero attention to car commercials except when they're buying, or more of us would notice that the cars seem to almost constantly be offered at some steep discount off MSRP. Which would again be economically impossible. If, that is, MSRP represented what its name suggests. But it doesn't.

For one, as Jack Baruth notes in this article at Hagerty, no one really knows how much it costs to make a car. Maybe some costs can be calculated, such as how much the manufacturer paid for the pieces it will assemble into a car, but many others can't. Trying to results in a mare's nest of interlocking expenses and such that has no real resolution. Just read the first few paragraphs of Baruth's article and you will see enough variables to make accountants close the spreadsheet and reach for the vodka.

I have family that buy new and like to buy whenever the warranty on their current vehicle runs out, since that puts them into the "Major repair costs" zone. To each his or her own, and it's not like I'm a canny wheeler-dealer that's made any salesman go home unhappy. But at least while I'm tooling around in my used-vehicle market, I'd like to think I'm being taken for less of a ride.

(H/T Dustbury)