What’s The Difference Between MSRP And True Cost To Own?
In an earlier post we listed down the items that were not included in the MSRP. Those costs were transportation to the dealership, registration, miscellaneous fees and taxes. Haggling or trying to get a discount only affects the MSRP which if you are successful only lowers the cost of the vehicle to its actual market value. Nowadays, the dealer may give in but the above costs are fixed and will add those on to the agreed price/MSRP.
Total Cost to Own or TCO is the more realistic price. This takes in several factors such as cost of fuel, insurance, financing, maintenance and the like over a span of 5 years. It may be that you may be able to buy the car but you can’t afford to run it.
Also earlier we compared the 2009 Mercedes CLK550 Cabriolet and the Mercedes SLK55 AMG Roadster and checked their TCOs. The CLK550 has an MSRP of $64,800 while the SLK 55 is at $65,700. The Roadster is $900 higher yet the TCO for the AMG is $85,929 and the CLK 550 is $95,972 or $10,043 more than the “pricier” ($900) SLK 55. So what gives? Because it costs more to maintain and operate CLK than the Roadster. The CLK 550 has a bigger engine. Not by much –by .1liters actually but fact is cost per mile is 13 cents higher. Multiply over the years and the miles and you’ll get the picture. Depreciation is probably the biggest difference. Depreciation cost of the Roadster in five years will be at $42,482 while the CLK will be around $46,468.
So again make sure to ask what is the TCO of the car you’re interest
