If you have ever visited a dealership, then you are likely familiar with the large paper stickers posted in the windows of new cars, describing their price, features, fuel economy, safety ratings, and more. Often called “Monroney Stickers,” these stickers have been legally required for all new cars sold since 1958 and help keep car shoppers informed. However, this requirement was not originally intended to protect the consumer––in fact, like so many auto industry regulations, it was designed to protect the dealers’ profits!
In the early days of the auto industry, the manufacturers held almost all the power and often pushed dealers in ways that cut into the dealers’ profits. By the 1930s, this had sparked an ongoing legal war between the dealers and manufacturers. Early attempts by dealers to take advantage of emergency legislation during the Great Depression were struck down as unconstitutional, while attempts to involve the Federal Trade Commission (FTC) backfired when the FTC pointed out that the manufacturers’ practices were lowering prices for consumers and instead recommended stricter regulations on the dealers.
After suffering two defeats, the dealerships backed off, but by the 1950s, the situation was bubbling over again. This time, the National Automobile Dealers Association (NADA) decided to appeal directly to Congress. The new Democrat-controlled Congress of 1954 was particularly hostile to big businesses like automobile manufacturers, making it a ripe time for the dealerships to strike. In February 1955, a Senate subcommittee of the Committee on Interstate and Foreign Commerce, headed by Senator Almer Stillwell Monroney of Oklahoma, set out to investigate the automobile industry.
Creating the Monroney Sticker
The investigation eventually led to a dramatic shift in the balance of power in the automobile industry, with dealerships gaining the upper hand over manufacturers. Not only were new Federal laws passed to protect the dealerships, but the push for legislation spread to the state governments as well, with the majority of states enacting even stricter laws limiting manufacturers. However, our concern is one particular piece of Federal legislation––the Monroney Sticker, or to be precise, 15 U.S. Code § 1231-1233.
Although it was sparked by the larger war between the dealerships and the manufacturers, the impetus behind the Monroney Sticker was actually to level the playing field between the dealers themselves. Some more unscrupulous dealers had invented a practice of “price packing,”––artificially inflating the list price of their new cars so that they could pretend to give the customer larger discounts and higher trade-in values. This cast the more honest dealers in a bad light, as it made the deals they were able to offer appear less appealing. In the words of Senator Monroney, “The dealer who is honest about the so-called ‘list price’ cannot compete with the one who ‘packs’ several hundred dollars extra into it so he can pretend to give you more on your trade-in.”
The proposed solution was to require car dealerships to prominently display a sticker in the window of new cars that listed the manufacturer’s recommended sales price (MSRP) of the base vehicle, all the options that it was equipped with, and how much the manufacturer charged to have the vehicle delivered to the dealership. This was intended to undercut dealerships that were listing falsified MSRPs for their vehicles and give the car-buyer a starting point for negotiations. This bill, officially entitled the Automobile Information Disclosure Act of 1958, was endorsed by the NADA and became federal law. Because of Senator Monroney’s public support for the measure, the sticker soon came to bear his name.
Changing With the Times
The first Monroney Stickers had little resemblance to the information-packed stickers that modern car shoppers are familiar with. They only covered the price and features of the vehicle, and it took quite a while before Congress began adding more requirements to the sticker. The first amendment came in 1979 when the inclusion of EPA fuel economy numbers was mandated. Fuel economy figures themselves have been subjected to more than a few revisions over the years, but while the math behind the numbers and the legal requirements for how they are displayed have changed, fuel economy has been an important part of the Monroney Sticker ever since.
The second major change to the sticker was introduced in 2007 when Congress mandated that labeling include the results of the National Highway Traffic Safety Administration’s (NHTSA) New Car Assessment Program (NCAP) safety tests. However, it should be noted that the NCAP rating does not yet take into account any driver-assist systems or active safety technologies when formulating its overall safety rating––so be sure to read the full list of features on the Monroney Sticker to know what sort of safety features are included.
With these additions, the purpose of the Monroney Sticker has changed considerably since it was first introduced. Rather than protecting dealerships from unfair competition, the sticker now informs consumers of a vehicle’s environmental impact and safety ratings. This shift has made it more of a consumer protection tool. However, the sheer amount of information now available to car buyers on the internet means that the Monroney Sticker has largely been rendered obsolete by technology. Still, we expect this familiar part of car shopping to remain with us for years to come and to continue to evolve to focus on the needs of car shoppers in the future.
How to Read a Monroney Sticker
The exact format of the Monroney Sticker is determined by the manufacturer, although it must follow certain guidelines and include all of the mandated information. There are four main sections to any sticker:
- Vehicle Identification
- Vehicle Features and Pricing
- Vehicle Safety Ratings
- Vehicle Fuel Economy
- Dealership Information
The section on vehicle identification is the shortest and most straightforward. It includes the make, model, trim, and model year of the vehicle, as well as its specific Vehicle Identification Number (VIN). All Monroney Stickers are unique to a specific vehicle, and you can double-check that it is the correct sticker by comparing the listed VIN to the actual VIN displayed in the lower corner of the windshield. This section will also include the vehicle’s final assembly point––the factory where all of the parts officially became a car.
The section on vehicle features and pricing was the heart of the original Monroney Stickers from the 1950s and still takes up a significant portion of the sticker. This is generally broken into two sections: a section listing the important standard features and a section listing the optional features included with the vehicle. However, note that it is up to the manufacturer to decide which standard features are listed. There will be a total MSRP, individual prices listed for all of the optional equipment, and a separate shipping fee that the manufacturer charged the dealer.
The vehicle safety section will always be separated from the other sections in its own block and will list the NHTSA NCAP ratings. These will be displayed in a simple 0-5 star format and are broken down into an Overall Vehicle Score, Frontal Crash, Side Crash, and Rollover scores. Unfortunately, the NCAP tests are rarely updated and usually lag behind the more stringent tests performed by the independent Insurance Institute for Highway Safety (IIHS), with few vehicles scoring fewer than four stars on any part of the NCAP; this renders the safety section of the Monroney Sticker less useful than it may appear.
The largest section on a modern Monroney Sticker is reserved for fuel economy and emissions ratings. It always follows a very specific format demanded by law, although the exact information changes slightly depending on whether the vehicle is a hybrid, EV, or traditional fossil fuel vehicle. Despite occupying a large portion of the sticker and being filled with authoritative-sounding numbers, this section is the least trustworthy. EPA fuel economy testing does not reflect the driving habits of the average American, and the prominent fuel cost numbers will virtually never line up with your actual costs.
Finally, there is a short section that lists the dealership that the vehicle was delivered to and the method of delivery. This section was a key part of the original Monroney Sticker and was designed to help catch dealers selling cars outside of their franchised areas. Today, it has become something of an afterthought, but it is an interesting reminder of the historical problems that encouraged Senator Monroney to pen the Automobile Information Disclosure Act of 1958.
