How Dealers Mark Up Cars (And How to Beat It)
Learn how dealers mark up new and used cars in the US—MSRP, market adjustments, add-ons, and how to avoid overpaying.
Dealers mark up cars in several ways in the U.S.—on the sticker, with fees, and with add-ons. Knowing how they do it is the first step to beating it. Here's how dealer markups work and what you can do.
TL;DR Markups show up as market adjustments (ADM) above MSRP, inflated add-ons, and bloated doc or dealer fees. Beat them by knowing market price, negotiating OTD, refusing mandatory add-ons, and walking when the number doesn't work. See fair value at autopremo.com.How Dealers Mark Up New Cars
1. Market adjustment (ADM)
Dealers add a "market adjustment" or "ADM" (additional dealer markup) above MSRP on hot or limited models. It can be $1,000–$10,000+ depending on demand. There's no factory backing for it—it's pure dealer margin.
How to beat it: Refuse to pay ADM unless you knowingly accept it for a rare car. Compare dealers; some don't add ADM. Or wait until demand cools and ADM drops or disappears. Use autopremo.com to see what similar buyers are paying so you know when ADM is in play.2. Sticker at or above MSRP with no discount
On non-hot models, "fair" is often at or below MSRP after incentives. If the dealer won't discount and won't apply incentives fully, they're effectively marking up by not giving you market price.
How to beat it: Get quotes from multiple dealers. Target MSRP minus incentives minus a dealer discount (e.g., $1,000–$2,000 on a $35k car). Autopremo.com's OTD calculator helps you model what you should pay.3. Mandatory add-ons at inflated prices
Nitrogen in tires, etching, "protection" packages, accessories—often added at 2–3x cost or more. When they're "mandatory," the dealer is marking up the car without calling it a price increase.
How to beat it: Refuse mandatory add-ons. "I'm only buying the car at the agreed price. No add-ons." If they insist, recalculate OTD and decide if the total is still acceptable—or walk.4. Doc and dealer fees above norm
Document fees of $500–$800+ when your state norm is $200–$300 are a markup. So are vague "dealer fees" or "processing fees" that aren't required by law.
How to beat it: Know your state's typical doc fee. Ask for a full fee breakdown. Negotiate OTD including fees—"I need to be at $X out the door including all fees." If fees are bloated, the selling price should come down to offset. See true OTD and spot markups at autopremo.com.How Dealers Mark Up Used Cars
1. Listing above market
Dealers list used cars at or above the high end of market, then "discount" to make it look like a deal. The "sale price" may still be at or above median comps.
How to beat it: Know market. Pull comps for same year, make, model, trim, similar mileage in your area. Use autopremo.com's price checker. If the listing is above median, negotiate to median or below—or walk.2. Reconditioning and fees
Reconditioning is real cost, but some dealers inflate it or add "reconditioning fees" on top of the price. Doc and dealer fees on used cars can also be marked up.
How to beat it: Negotiate OTD. "What's the out-the-door price including all fees?" Get it in writing. Compare to market OTD (price + typical tax and fees). If the total is high, push back on price or fees.3. Add-ons and warranties
Extended warranties, gap, fabric protection—often sold at high margin. They're optional. If they're "required," that's a markup.
How to beat it: Say no to add-ons you don't want. If you want a warranty, shop it separately or negotiate the warranty price down. Don't let add-ons inflate the car price.Your "Beat the Markup" Checklist
- [ ] Market price known for this exact car (new: MSRP + incentives; used: comps)
- [ ] Negotiating on OTD, not payment
- [ ] No mandatory add-ons accepted without offset in price or refusal
- [ ] Doc and fees in line with state norm; OTD reflects that
- [ ] Multiple dealer quotes compared; willing to walk
Bottom Line
Dealers mark up cars with ADM, no discount off MSRP, mandatory add-ons, and bloated fees. Beat it by knowing market price, insisting on OTD, refusing mandatory add-ons, and walking when the number doesn't work. Autopremo.com gives you the data to see fair value and spot markups so you don't overpay.