Purchasing a car, whether new or used, is a significant financial decision. Navigating the complexities of car pricing, from MSRP to dealer markups, can be daunting. Ensuring you’re not overpaying and securing a fair deal requires the right information and tools. This is where understanding and utilizing a tool like Edmunds True Market Value® (TMV®) becomes invaluable. Think of it as your expert guide in the often-murky waters of car negotiations, helping you confidently steer towards the right price.
Understanding Edmunds True Market Value (TMV) and Why It’s Your Ideal Car Buying Companion
Edmunds True Market Value®, also known as Edmunds Suggested Price, is essentially an estimated average transaction price for vehicles in your specific area. In simpler terms, it’s what other people are actually paying for a particular car, both new and used, right now. This isn’t just some arbitrary number; it’s derived from meticulous analysis of real-world sales data.
Why is this crucial for you as a car buyer? Because knowledge is power, especially when negotiating car prices. Armed with the Edmunds TMV, you enter the dealership or private sale armed with a realistic price benchmark. It moves you away from guesswork and provides a solid foundation for discussions, ensuring you’re aiming for a fair price, not just the sticker price. For those looking to trade in their current vehicle, the Edmunds TMV also provides a trade-in value estimate, giving you a clear understanding of what to expect when selling to a dealer.
Edmunds invoice pricing within the results graph
Decoding Edmunds TMV: How Does This Price Tool Work?
The magic behind Edmunds TMV lies in its data-driven approach. Edmunds analyzes millions of data points to calculate these suggested prices. This includes a wide range of factors that influence vehicle pricing:
- Real Transaction Data: Edmunds gathers actual sales data directly from dealerships across the country. CarMax, a major automotive retailer, is among the data providers. It’s important to note that while Edmunds is a subsidiary of CarMax, CarMax’s influence is limited to data contribution, ensuring the TMV calculations remain unbiased.
- Supply and Demand Dynamics: Like any market, car prices are affected by supply and demand. TMV considers the current availability of a particular model and its popularity to adjust pricing accordingly.
- Incentives and Rebates: Manufacturer incentives and rebates play a significant role in the final price. TMV calculations take into account manufacturer-to-dealer incentives (like dealer cash) which impact the dealer’s cost. However, it’s crucial to understand that TMV generally doesn’t include manufacturer-to-consumer rebates (like cash rebates you might be eligible for), sales tax, DMV fees, or dealer documentation fees, as these are applied after the transaction price is determined.
- Vehicle Options and Features: The specific options and features equipped on a vehicle significantly affect its price. TMV calculations are granular, considering the exact year, make, model, trim, and options to provide a precise suggested price.
- Regional Market Conditions: Car prices can vary geographically due to regional marketing fees and other local market factors. Edmunds TMV reflects these regional differences, ensuring the price suggested is relevant to your location.
This comprehensive data analysis allows Edmunds TMV to provide a realistic and dynamic price benchmark, far beyond just the static MSRP or invoice price.
Step-by-Step: Using Edmunds TMV as Your Car Purchase Price Guide
Now that you understand what Edmunds TMV is and how it’s calculated, let’s explore how to effectively use it during your car buying journey:
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Configure Your Ideal Vehicle: Whether you’re buying new or used, start by specifying the exact vehicle you’re interested in. For new cars, utilize the “build and price” tools available on Edmunds or dealership websites. Accurately select the year, make, model, trim level, and desired options. For used cars, be equally precise with details like year, make, model, mileage, trim, and condition.
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Locate the Edmunds Suggested Price: Once you’ve configured your vehicle, look for the Edmunds Suggested Price (formerly True Market Value). It’s typically displayed prominently alongside other pricing information like MSRP and invoice price. You can find this information on the Edmunds website and mobile app, making it accessible even when you are at the dealership.
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Compare TMV to Dealer Quotes: When you receive a price quote from a dealer, compare it against the Edmunds Suggested Price. This comparison is your starting point for negotiation.
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Negotiate with Confidence:
- Price Higher Than TMV?: If the dealer’s initial quote is higher than the TMV, use the TMV as leverage. Politely inform the salesperson that your research on Edmunds shows the vehicle is typically selling for around the TMV. A phrase like, “According to Edmunds, the fair market price for this car is around $[TMV amount]. Are you willing to work with me on that price?” can be very effective.
- Aim for TMV or Lower: While TMV is a fair price, aim to negotiate to meet or even beat it if possible. Dealers often have some wiggle room, and TMV gives you a target to strive for.
- Be Prepared to Show Your Research: Having a printout or screenshot of the Edmunds Suggested Price readily available can strengthen your negotiation position by demonstrating you’ve done your homework.
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Understand TMV Limitations: While Edmunds TMV is a powerful tool, it’s not infallible. Market conditions can fluctuate rapidly, and data might not always be perfectly up-to-the-minute. In situations where TMV data seems inaccurate, consider getting price quotes from multiple dealerships to get a real-world understanding of the current market price.
New Car Purchases: Leveraging TMV for Optimal Negotiation
When buying a new car, Edmunds TMV is especially powerful in conjunction with dealer price quotes. Here’s how to maximize its impact:
- Initial Dealer Contact: After getting an initial quote from a dealer (online or in person), immediately compare it to the Edmunds Suggested Price.
- Counter Offers: If the initial quote is above TMV, use TMV to anchor your counteroffer. Start by offering the TMV price, or even slightly below, to initiate negotiation.
- Fair Deal Recognition: For buyers who prefer a straightforward approach, offering to pay the Edmunds Suggested Price can often lead to a quick and fair agreement. It signals to the dealer that you’re informed and serious about buying at a reasonable price.
- Multiple Dealer Quotes: As a best practice, especially for new cars, get quotes from at least three dealerships. This not only gives you a broader market view but also allows you to leverage competing offers and further refine your negotiation strategy using TMV as your guide.
Used Car Valuations: TMV for Buying, Selling, and Trade-Ins
Edmunds also provides appraisal tools based on TMV principles for used cars. This is invaluable whether you’re buying used, selling your current car, or trading it in.
- Trade-In Value: Before visiting a dealership to trade in your car, use the Edmunds appraisal tool to determine its trade-in value. This gives you a realistic expectation of what the dealer might offer and prevents you from accepting a lowball offer.
- Dealer Retail Price: If you’re buying a used car from a dealer, use the appraisal tool to check the “dealer retail” price. This is the TMV for used car purchases from dealerships and helps you assess if their asking price is fair.
- Private Party Value: For private car sales (buying or selling), the “private party” value from Edmunds TMV provides a guideline for setting a fair asking price (if you’re selling) or making a reasonable offer (if you’re buying). Sellers might price slightly above this to allow room for negotiation.
- Condition and Options Accuracy: When using the appraisal tool, be meticulously honest and accurate about your used car’s condition and options. Select the condition level that truly reflects the car’s state (most cars fall into “clean” or “average” condition). Accurate input ensures a more precise TMV valuation.
- Certified Pre-Owned (CPO) Pricing: Edmunds also offers TMV pricing for certified pre-owned cars. This is typically higher than standard used car TMV due to the added warranty and inspection benefits of CPO vehicles.
TMV and Car Leasing: Unlocking Favorable Lease Terms
While Edmunds doesn’t provide specific lease prices directly through TMV, the TMV of a new car is still a critical component in getting a good lease deal.
- Lease Payment Foundation: Monthly lease payments are fundamentally based on the car’s selling price, known as the “capitalized cost” in leasing. A lower capitalized cost directly translates to lower monthly payments.
- Negotiating Capitalized Cost: Use the Edmunds Suggested Price for new cars as your target capitalized cost when negotiating a lease. Negotiating down the capitalized cost to or below TMV will significantly reduce your monthly lease payments.
- Edmunds Lease Calculator: Once you’ve determined the market value (ideally TMV) of the car you want to lease, use the Edmunds auto lease calculator. Input the TMV as the capitalized cost, along with other lease terms, to estimate your monthly payments and evaluate lease offers.
Key Car Buying Terms to Remember: TMV in Perspective
Navigating car buying involves a lot of pricing jargon. Keep Edmunds TMV in mind as your anchor point amidst terms like MSRP, invoice price, sticker price, and savings. TMV represents the real-world transaction price, offering a practical benchmark to evaluate all other figures and ensure you’re on track to pay the right price.
Frequently Asked Questions About Edmunds True Market Value
Q: What exactly does Edmunds True Market Value (TMV) include and exclude?
A: Edmunds TMV includes factors like manufacturer-to-dealer incentives, destination charges, and applicable regional adjustments. However, it generally excludes manufacturer-to-consumer rebates, sales tax, license/registration fees, and dealer documentation fees. These excluded items are typically applied after the vehicle’s transaction price is agreed upon.
Q: Does Edmunds TMV account for market variations across the country?
A: Yes, Edmunds TMV is designed to reflect varying market conditions for both new and used vehicles nationwide, including regional marketing fees and other location-specific factors.
Q: How frequently is Edmunds TMV data updated?
A: Edmunds downloads transaction data weekly from a vast network of dealerships (around 5,000) across the U.S., representing a significant portion of the market. This frequent data refresh ensures TMV remains current and responsive to market changes.
Q: Where does Edmunds get its transaction data?
A: Edmunds partners with a vendor to securely extract approved transaction data from dealership management systems. CarMax is among the dealerships providing data, but their influence is limited to data contribution, maintaining TMV’s objectivity.
Q: Why is transaction data so important for TMV?
A: Real transaction data is the cornerstone of accurate TMV calculations. It allows Edmunds to determine the prices consumers are actually paying in the market, leading to more precise and reliable suggested prices. More data means greater accuracy.
Q: What kind of vehicles are not appraised by Edmunds TMV?
A: Edmunds TMV does not provide appraisals for vehicles older than 1990 model year, exotic vehicles, RVs, commercial vehicles (trucks, tractors, trailers), motorcycles/ATVs, salvage title vehicles, demo vehicles, non-U.S. vehicles, or heavily customized vehicles with aftermarket parts.
Q: How does Edmunds TMV relate to invoice price and MSRP?
A: Invoice price is roughly what the dealer pays the manufacturer, while MSRP is the manufacturer’s suggested retail price (sticker price). Edmunds TMV sits in between these, representing the average actual selling price. It’s a more realistic benchmark than either invoice or MSRP alone. Invoice price is a useful piece of information but doesn’t reflect all dealer discounts or consumer rebates.
Q: Does Edmunds TMV include taxes and fees?
A: No, Edmunds TMV does not include taxes or fees like sales tax, registration, or documentation fees, as these vary by location and dealership. TMV focuses on the vehicle’s transaction price before these additional costs.
Q: Does TMV account for aftermarket modifications?
A: No, Edmunds TMV pricing is for vehicles with factory-installed options only. Aftermarket modifications are excluded due to their wide variability in quality and value, and the potential to void warranties. Customizations may even decrease trade-in value as dealers prefer to return vehicles to stock condition.
Q: Does TMV include dealer-installed options?
A: No, TMV only includes factory-installed options. Dealer-installed options and accessories are excluded due to inconsistencies in pricing and value.
By understanding and utilizing Edmunds True Market Value, you equip yourself with the knowledge to confidently navigate the car buying process and ensure you’re paying the right price for your next vehicle. It’s more than just a price; it’s your key to a fair deal and a smoother car buying experience.
