MSRP stands for Manufacturer Suggested Retail Price is the suggested price by the manufacturer to the dealer/retailer. Sometimes it’s also called “List Price” or Sticker Price”. It’s the price you usually see stuck on the windshield of the car on display at the dealership. This is what usually catches your eye next to the car itself naturally. What this price does not include are transportation to the dealership cost, registration, miscellaneous fees and taxes. Though you may be able to get a discount off the MSRP you may quite possibly still be shelling out more due to the above charges.
True Cost to Own on the other hand is the cost to own over a five year period. The following items are factored in when computing this amount:
Cost per Mile
Cost of fuel
Depreciation
Financing
Insurance
Fees and Taxes
Maintenance Repairs
For example the 2009 Mercedes CLK550 Cabriolet and the Mercedes SLK55 AMG Roadster. The CLK550 has an MSRP of $64,800 while the SLK 55 is at $65,700. The Roadster is $900 higher yet the Total cost to own or TCO for the AMG is $85,929 and the CLK 550 is $95,972 or $10,043 more than the “pricier” ($900) SLK 55. The lesson here is that one should not take things at face value. Always ask your dealer for the TCO before making a decision. It may come out to be more expensive in the long run.
So what’s the difference between MSRP and True Cost to Own? In one phrase: A lot.