Navigating the world of car buying can be complex, with a myriad of prices and figures thrown your way. Understanding what constitutes a fair price is crucial, and that’s where the Edmunds New Car Pricing Tool, also known as Edmunds True Market Value® (TMV®), comes into play. This tool is designed to provide you with an estimated average transaction price for new vehicles in your area, empowering you to negotiate from a position of knowledge.
Understanding Edmunds True Market Value® (TMV®)
The Edmunds New Car Pricing Tool, or TMV®, is essentially Edmunds’ estimate of what people are actually paying for a specific new car in your local market. It’s not just a sticker price or a manufacturer’s suggestion; it’s based on real-world transaction data. This means it reflects the current market conditions, including supply, demand, and incentives, giving you a realistic benchmark for your car purchase.
Edmunds invoice pricing within the results graph
Using the Edmunds New Car Pricing Tool is straightforward. Whether you’re configuring a car online or browsing dealer inventory, you’ll find the Edmunds Suggested Price displayed alongside the invoice price (dealer’s cost) and the Manufacturer’s Suggested Retail Price (MSRP). This comprehensive view allows you to see the range and understand where a fair transaction price likely lies.
It’s vital to ensure you accurately specify the year, make, model, and options of the vehicle you’re interested in. Inaccurate details can lead to incorrect pricing information, potentially causing confusion during dealership negotiations.
How Edmunds Calculates True Market Value
Edmunds’ New Car Pricing Tool doesn’t pull figures out of thin air. It’s based on a robust analysis of millions of data points. This includes:
- Real Transaction Data: Edmunds gathers data from dealerships across the country, including CarMax, a wholly-owned subsidiary of Edmunds since June 2021. This real-world transaction information forms the core of TMV calculations.
- Supply and Demand: The tool considers the current supply of vehicles and consumer demand. High-demand vehicles with limited supply may command prices closer to MSRP, while less popular models might be available for less.
- Incentives and Rebates: Edmunds’ pricing tool accounts for manufacturer-to-dealer incentives, destination charges, and applicable advertising fees. However, it’s important to note that it doesn’t include manufacturer-to-consumer rebates, sales tax, DMV fees, or dealer documentation fees, as these are typically applied after the transaction price is set.
- Regional Market Conditions: TMV reflects varying market conditions across the country. Regional marketing fees and other local factors are considered to provide a localized price estimate.
This comprehensive approach ensures that the Edmunds New Car Pricing Tool offers a realistic and data-driven estimate of a vehicle’s true market value.
Leveraging Edmunds TMV in New Car Negotiations
Knowing the Edmunds Suggested Price empowers you in your car buying journey. Here’s how to effectively use this information during negotiations:
- Countering a High Offer: If a dealer quotes you a price higher than the Edmunds Suggested Price, use the TMV as leverage. For example, if the salesperson quotes $30,000, but Edmunds suggests $28,000, you can say, “According to Edmunds, this car is selling for around $28,000. Can you match or beat that price?”
- Making a Fair Offer: For buyers who prefer a straightforward approach, offering to pay the Edmunds Suggested Price can be a good starting point. Presenting a screenshot or printout of the TMV can demonstrate you’ve done your research and are serious about a fair deal.
While the Edmunds New Car Pricing Tool is highly accurate, it’s not infallible. Market fluctuations and data limitations can sometimes occur. In such cases, it’s always wise to gather additional real-world TMV data by obtaining price quotes from multiple dealerships (ideally three) to get a broader picture of the current selling price.
Edmunds TMV and Car Leasing
Even if you’re planning to lease a new car, the Edmunds New Car Pricing Tool remains a valuable asset. Lease payments are directly influenced by the car’s selling price, known as the “cap cost” in leasing terms. A lower selling price translates to lower monthly lease payments.
Once you’ve determined the True Market Value of the car using Edmunds’ tool, you can utilize the Edmunds auto lease calculator. By inputting the TMV as the cap cost, along with other lease terms, you can estimate your monthly lease payments and ensure you’re getting a fair lease deal.
Edmunds TMV for Used Car Appraisals
Beyond new cars, Edmunds also offers a valuable appraisal tool for used cars, which is intrinsically linked to the principles of the New Car Pricing Tool. This tool helps determine the trade-in value when selling your current vehicle or the dealer retail price when buying used. For private sales, it provides a “private party” price benchmark.
When using the used car appraisal tool, accuracy is key. Be honest about the vehicle’s options and condition level. Most cars fall into “clean” or “average” condition, with “outstanding” condition being rare. Edmunds also provides market prices for certified pre-owned (CPO) cars, giving you a comprehensive view of used car values. Remember, even these are average prices, and negotiation is still possible.
Key Car Pricing Terms to Remember
Navigating car pricing involves understanding various terms. While MSRP, sticker price, savings, and invoice price are common, the Edmunds Suggested Price from the New Car Pricing Tool is your anchor point. It cuts through the noise and provides a realistic market value, helping you keep perspective during negotiations.
Here’s a quick breakdown of key terms:
- MSRP (Manufacturer’s Suggested Retail Price): The sticker price, the manufacturer’s recommended selling price.
- Invoice Price (Dealer Cost): Roughly what the dealer pays the manufacturer for the car. However, dealers often receive additional incentives not reflected in the invoice.
- Edmunds Suggested Price (True Market Value): Edmunds’ estimate of the average transaction price, reflecting real-world sales data and market conditions.
By focusing on the Edmunds New Car Pricing Tool and understanding True Market Value, you can approach car buying with confidence, ensuring you pay a fair price and drive away with a great deal.
Frequently Asked Questions about Edmunds True Market Value®
What exactly is Edmunds True Market Value® (TMV®)?
Edmunds True Market Value®, or Edmunds Suggested Price, is our estimate of the average transaction price for new and used vehicles in your area. It reflects what other buyers are actually paying, helping you start negotiations with a fair price in mind. For trade-ins, TMV helps you understand the potential value of your vehicle.
Does Edmunds TMV include all incentives and fees?
Edmunds TMV for new cars does include manufacturer-to-dealer incentives, destination charges, and advertising fees (where applicable). However, it does not include manufacturer-to-consumer rebates, sales tax, license/registration fees, or dealer documentation fees, as these vary and are applied later in the transaction.
Does Edmunds TMV account for market variations across the country?
Yes, Edmunds Suggested Prices reflect varying market conditions for new and used vehicles nationwide, including regional marketing fees and other local factors.
Where does Edmunds get its data for TMV calculations?
Data is gathered weekly from the dealer management systems of approximately 5,000 dealerships and dealer groups across the U.S., representing about 25% of all U.S. dealerships. CarMax, Edmunds’ parent company, is among the data providers.
How is dealership data handled by Edmunds?
Edmunds uses a secure vendor to extract only the data dealerships have approved for sharing. This data is then electronically transmitted to Edmunds.
Why is transaction data so crucial for Edmunds TMV?
Transaction data is essential for establishing accurate Edmunds Suggested Prices and appraisal values. More data leads to higher TMV accuracy, ensuring fair prices for both dealers and consumers, and facilitating smoother, less stressful negotiations.
What factors are included in Edmunds Suggested Price calculations?
For new vehicles, the national base price, destination charges, regional adjustments, color adjustments, optional equipment, and applicable incentives are all factored into the Edmunds Suggested Price. Used vehicle appraisals also consider condition and mileage.
How does invoice price relate to Edmunds TMV?
Invoice price (dealer cost) is a starting point, but it’s often higher than what dealers actually pay due to hidden incentives. Edmunds TMV bridges the gap between MSRP and invoice, reflecting real-world transaction prices and providing a fairer benchmark.
Why might invoice prices on Edmunds differ from other sources?
Discrepancies can arise from regional pricing differences, variations in included fees (like advertising fees added by individual dealers), and ensuring that vehicle styles and options are precisely matched when comparing.
Does Edmunds TMV include taxes and fees?
No, Edmunds TMV excludes taxes and fees (sales tax, registration, doc fees) as these vary based on buyer location and dealership practices.
Does Edmunds provide pricing for modified vehicles?
No, Edmunds does not provide pricing for vehicles with aftermarket parts due to the wide variation in part quality and value. Modifications may also negatively impact trade-in value as dealers typically prefer to return vehicles to their original condition.
