New data from AutoTrader.com debunks the pervasive myth that online vehicle pricing transparency erodes value and gross for dealers.
Do dealers who price their new vehicles below MSRP attract buyers?
New data from AutoTrader.com® debunks the pervasive myth that online vehicle pricing transparency erodes value and gross for dealers by showing that dealers who price their new vehicles below MSRP attract buyers—and more of them. An AutoTrader.com digital audience analysis of over 6,605 new vehicle sales across 1,000 dealerships showed that when dealers list their new vehicles below MSRP, they receive more traffic to their inventory online, attract buyers from greater distances and sell more vehicles than dealers who list their new vehicles at MSRP. Additionally, the data shows that buyers tend to transact at a higher price than the range they were searching within online, indicating that there is significant opportunity for additional incremental dealer profit.
“The belief that advertising competitive prices for new vehicles online is fueling a race to the bottom simply isn’t holding up under analytic scrutiny,” said Scott Hernalsteen, senior director of enterprise analytics at AutoTrader.com. “Instead, we’re seeing that when dealers put an actual price—not MSRP—on their new vehicles, they are able to more effectively compete to capture and influence consumers’ attention. Consumers know that most people don’t pay MSRP, so when dealers list a price at which they are more likely to transact, consumers take notice.” Hernalsteen also noted that laws in certain states prohibit advertising prices below MSRP and cautioned dealers to consult with their legal advisors.
According to the analysis, new cars priced below MSRP get 34 percent more page views than new cars priced at MSRP. Pricing-savvy dealers not only received more eyeballs on their inventory online—they actually sold more vehicles, too. The analysis showed that dealers who priced their new vehicles below MSRP sold 20 percent more new cars than their counterparts who used MSRP instead. And, buyers traveled an average of 10 more miles to dealers who listed their news cars below, rather than at, MSRP.