ATLANTA -

Of course, getting a new vehicle sold as close to MSRP is a goal for most dealers, but are they shooting themselves in the foot by posting vehicles online at their actual market value?

AutoTrader.com revealed today data that shows dealers who price new vehicles below MSRP attract more buyers.

The site came to this conclusion after conducting a digital audience analysis of more than 6,605 new-vehicle sales across 1,000 dealerships.

The data shows 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,” the site revealed.

AutoTrader.com execs contend that lowering prices on new vehicles will not necessarily launch a “race to the bottom.”

In fact, half of the dealers who have inventory on the site list a price other than MSRP on their new=vehicle inventory already. 

“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 consumer’s 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 did caution that laws in certain states prohibit advertising prices below MSRP and encouraged dealers to consult with their legal advisers before engaging in the practice.

Breaking down the numbers, the data shows that new cars priced below MSRP get 34 percent more page views than new cars priced at MSRP.

Interestingly, the data also showed that pricing below MSRP can push sales up, as well. According to the study, dealers who priced their new vehicles below MSRP sold 20 percent more new cars than those who used MSRP.

And it seems buyers are willing to travel more for a good deal. According to the study, buyers traveled an average of 10 more miles to dealers who listed their news cars below, rather than at, MSRP.

“New car buyers do as much to find the right vehicle at the right price as used car buyers, so dealers need to devote as much attention to merchandising their new vehicles as they do their used vehicles,” Hernalsteen said. “Shoppers flock to new-car listings that are well merchandised with custom photos, comments and below-MSRP pricing, so the dealers who invest in these aspects are helping shoppers make their short lists shorter.”

And pricing lower than MSRP may not mean less money for dealers in the long run.

According to the analysis, buyers tend to pay more than the range they were searching within online, which could mean there is opportunity for additional incremental dealer profit, the site pointed out.

“Quite simply, listing below MSRP and investing in merchandising increases turn on new vehicles, and with the opportunity for incremental add-ons at the point of sale, that higher rate of turn can result in more — not less — profit for dealers,” Hernalsteen said. “Having an effective pricing strategy online doesn’t equate to a race to the bottom — it results in winning the race to the consumer.”

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