The Nonnegotiable “Destination Charge” Is Increasing Rapidly

by Zach Shefska | Last updated Jan 25, 2023 | New Cars

Used and new car prices are climbing through the roof, and the rapidly increasing “destination charge” could be the culprit. The increase in destination charges, also known as “shipping” or “freight” charges has increased so rapidly that three class action lawsuits are currently being litigated.

Destination Charge Increases

Here’s how much major automakers have increased their destination charges since 2017.

What is a destination charge?

The destination charge, also sometimes portrayed online as a shipping fee, are hidden from online advertised prices, however every buyer pays for them. Heck, even the dealership where you buy the car pays a destination fee, they simply pass that along to the end buyer.

The destination charge is a line item on the manufacturer’s invoice for a vehicle. It is a fee that the automaker sets. There is a retail price for it, and a wholesale price for it. The dealer pays a wholesale price, the consumer pays a retail price. In many cases the price is actually the same.

Destination charges are set by the manufacturer and are non-negotiable, since they are part of the vehicle’s MSRP. The manufacturer’s suggested retail price is non-negotiable (it is set by the manufacturer), however you can (and should!) negotiate your total out-the-door price (which includes a hopefully discounted selling price).

It is well known in the automotive industry that manufactures make a profit on their destination charges. Currently there are 3 active class action lawsuits against GM, Ford, and Stellantis for “deceptive” delivery fees.

From the GM lawsuit:

The lawsuit, filed in the Southern District of California, involves two plaintiffs who allege they were not aware that GM made a profit off of the destination fees it charges customers. According to Car Complaints, the plaintiffs are California resident Robert Romoff, who recently purchased a new 2021 Chevrolet Equinox with a $1,195 destination charge, and New Jersey resident Joe Siciliano, who purchased a new 2019 Cadillac Escalade with a $995 destination charge.

Who has increased their destination charge the most?

Stellantis, formerly Fiat Chrysler has increased their destination charges the most. Consumer Reports found Stellantis’ destination charges increased an average of 90 percent for Chrysler, Dodge and Jeep from 2011 to 2020, and 74 percent for Ram over the same period. And, even though no one buys them, Stellantis increased Fiat’s destination charge by 114 percent since 2012.

Surprising to many is the fact that domestically produced vehicles are also getting hit with VERY high destination charges. Take for example the new Jeep Grand Wagoneer which is built in Michigan. It comes with a $2,000+ destination charge.

What’s frustrating about the increase in destination fees is that it is yet another “black box” in the car buying process. Not only do we (consumers) have to deal with BS and bogus fees from the dealership, we also have to simply “accept” theses hidden profit fees from the manufacturers.

New Car Features You Won’t Get Because of the Chip Shortage (Updated)

by Zach Shefska | Last updated May 3, 2022 | New Cars

Updated April 2022

Automakers are in a pickle: delay production of cars because of a lack of chips, or produce cars, trucks, and SUVs missing some features customers have come to expect? It’s fascinating to see how different automakers are handling this once in a lifetime supply chain conundrum!

Ford, for example, just announced that they will ship and sell vehicles without chips controlling non-safety critical features. Yes, you read that right. It’s 2022, and Ford is getting even more desperate for semiconductors. It’s doubtful that there are any optimists left with regards to the auto industry supply shortage.

Ford isn’t the only manufacturer that is struggling to produce vehicles with all of their standard equipment. Let’s break down who is doing what, and which features consumers should and shouldn’t expect in their new car.

Ford to deliver thousands of vehicles without non-safety critical features

In March 2022, Ford told dealers that the chip shortage is getting worse, and that they’re going to need dealer’s help to sort things out. Automotive News reports that Ford executives told dealers that the automaker will have to enact a worst-case scenario plan that was floated last summer. Ford’s plan is to ship new vehicles to dealers without many of the semiconductor chips that are essential for features like auto stop-start, heated seats, and certain infotainment functions.

Ford spokesman Said Deep told Automotive News Ford would build Explorers without rear seat heat controls that could be added later. Ford already offers customers the option to order F-150s without the auto stop-start feature. Deep told Automotive News that in the case of the Explorers, buyers will receive a price reduction for the change, and Ford will restore rear seat passenger control of heating and air conditioning for free at a later date.

On the hunt for the elusive Ford Bronco? Thousands were recently seen waiting for parts outside of a production plant in Michigan. Patience and compromise will go a long way for car shoppers in 2022.

GM removes many features

General Motors has seemingly been hit the hardest by the ongoing chip shortage. While the company tries to move forward, many core features and functionalities have been removed from their lineup.

GM removed heated and ventilated seats and heated steering wheels

General Motors made headlines late on Friday, November 12th when they announced that beginning on Monday, November 15th they would stop production of most of their vehicles with heated and ventilated seats, as well as heated steering wheels.

The effected vehicles include:

• Chevrolet Colorado
• Chevrolet Blazer
• Chevrolet Equinox
• GMC Canyon
• GMC Terrain
• All Chevy Silverados and Traverses except High Country trims
• All GMC Sierras and Acadias except Denalis

General Motors has not signaled when the vehicles would be produced with their previously expected equipment. GM has said that effected customers will be eligible for a $150 to $500 credit.

Earlier this year, GM removed climate control digital temperature displays, side blind zone alert and Super Cruise driver-assist technology on certain 2022 vehicles. Fortunately, now those features are available.

Update 11/22/21

On Friday November 19th, in a memo to their dealers, GM announced that they will reduce the credit given to customers who do not receive vehicles with heated seats. Instead of a credit up to $500, GM will credit customers up to $50. Correct, $50 for losing heated seats in their car. That’s crazy.

GM also instructed dealers that they think they will be able to retrofit vehicles with heated and ventilated seats by mid-2022. GM told dealers that heated steering wheels cannot be retrofitted, so vehicles missing that feature will still be discounted by $150.

Chevrolet and GMC lose HD Radio and wireless charging

Earlier in 2021, GM said it would eliminate the HD radio option because of a lack of semiconductors. Both 2021 Chevrolet Silverado 1500s and GMC Sierra 1500s, as well as 2022 model year 2500 and 3500 heavy-duty pickups were impacted. All trim levels were affected, and GM is offering buyers of a $50 credit.

Also earlier this year, GM announced that wireless charging pads would not make it into many of its vehicles. The 2021 Chevy Tahoe, Suburban, and GMC Yukon SUVs as well as the 2022 Buick Enclave, Chevy Traverse, and Cadillac XT5 and XT6 were all impacted by this decision.

Vehicles for sale without the charging pad will get a $75 credit.

GM removes auto stop-start and V-8 cylinder deactivation

Two core features that help make GM trucks more fuel efficient have gone missing: auto stop-start, and cylinder deactivation. In June, GM said the 2021 Silverado 1500 and the GMC Sierra 1500 would not come with stop-start technology. Customers who miss out on this feature are entitled to another $50 credit.

Even earlier this year, GM announced that some 2021 Chevy Silverado and GMC Sierra models would use more gas because they would not have their cylinder-deactivation systems. The impact? The trucks would increase their fuel usage by one mile per gallon.

BMW removes touchscreens from their cars

A brand new BMW X7 SUV has an MSRP of upwards of $100,000. At that price, you’d expect to get any feature or option you could possibly imagine. Buy a new car in 2021 and you’ll notice a piece of equipment nearly as ubiquitous as the seatbelt, however in your new $100,000 X7 you won’t have it; a touchscreen.

The effected vehicles include:

• 3-series
• 4-series coupe and convertible
• 4-series Gran Coupe (excluding i4)
• Z4
• All variants of the X5, X6, and X7

BMWs that were also ordered with the Parking Assistant package will now lose BMW’s Backup Assistant technology.

Porsche removes adjustable seat and electric steering column adjustment

Earlier this Spring, Porsche told its U.S. dealers that their 18-way adjustable seat option (part of a $2,090 upgrade) would not be available. It appears that today the option is back for the Macan.

Another feature temporarily missing from some new Porsches is the electric steering column adjustment. Earlier this month, Porsche spokesperson Christian Weiss said that Porsche has been in communication with customers who have ordered cars with this feature, and said it will deliver vehicles with a manual steering column adjustment for the time being. Once available, the electric version will be retrofitted.

Tesla removes USB ports and passenger-seat lumbar support

Even thought hey have raised their MSRP by 20%+ in 2021, Tesla has not been immune from chip shortage challenges. Earlier this year in May, Tesla removed lumbar support from the front passenger seat in the Model 3 and Model Y EVs.

Recently, another feature was silently deleted, USB-C ports in the rear of the center console of the Model 3 and Model Y.

How will this affect used car prices?

Used car prices have ben skyrocketing for the past year. With new car production unable to keep up with demand, we have seen wholesale and retail used car prices set all-time highs. Frequently we are seeing used cars sell for more than their original MSRP.

Interestingly, with new vehicles being sold without all of their standard features, we wouldn’t be surprised if there is even more upward pressure on newer model year used vehicles. Would a consumer pay a premium for a used 2020 or 2021 that has all of the functionality they’ve come to expect, or wait for a factory order that may or may not have the features they expect? We think consumer demand for new user vehicles will continue to drive used car prices up.

New Car Inventory Levels Increase 1.3% – November 2021

by Zach Shefska | Last updated Dec 8, 2021 | New Cars

If you’re looking to buy a new car anytime soon, you’re in for a rude awakening … Finding a new car for sale right now in the United States is borderline impossible. Typically, manufacturers stock their dealers with a nearly 100 day supply of inventory. Right now, the industry is running at an 18 days supply. That being said, the total number of new cars in inventory ticked up 1.3% this month as compared to last.

To view last month’s new car inventory data, click here.

Each month we capture new data on industry-wide new car inventory levels. We have compiled the most up-to-date information here for you. Click below to jump to a particular manufacturer. Please note that we are not able to get vehicle specific inventory data for many of the manufacturers. This is something we hope to be able to provide in the near future.

You can access all of the data here: https://docs.google.com/spreadsheets/d/1sDB4ybm8F6VQotMS-HyjWv9n5IdQjTF6mbw8RwbbYXo/edit?usp=sharing

Days supply: Number of days needed to sell all vehicles in inventory, based on the previous month’s daily selling rate

Inventory: Unit count of vehicles on hand at dealerships, factory lots, ports of entry and in transit on a specific date

New Cars With The Most Inventory

Based on days supply, here are the top ten vehicles with the most inventory:

Based on solely the number of units available, here are the top ten vehicles with the most inventory:

You can check the current inventory levels of a particular vehicle in your market by running a free market price report in your CarEdge account.

New Cars With The Least Inventory

Based on days supply, here are the cars, trucks, and SUVs with the lease inventory right now:

Based on the total number of available units, here are the cars with the least inventory:

These are the vehicles with the lowest days supply of inventory right now. Don’t expect to get a “deal” on any of these vehicles, because the dealership knows they have very little inventory.

Learn more about the chip shortage. Read: The How We Ran out of Cars in the US

Ford Inventory Levels

Ford invoice pricing can be found here: https://caredge.com/guides/ford-invoice-price/

Acura Inventory Levels

Honda Inventory Levels

Genesis Inventory Levels

Hyundai Inventory Levels

Kia Inventory Levels

Mazda Inventory Levels

Subaru Inventory Levels

Lexus Inventory Levels

Toyota Inventory Levels

Volvo Inventory Levels

The Full Data Set

New 2022 Toyota Tundra Prices Are 15% Higher than Last Year

by Zach Shefska | Last updated Nov 19, 2021 | New Cars

Toyota Tundra prices are going up, up, up. Each model year automakers increase their base MSRP, however this year the percentage increase is especially impressive. Amidst the ongoing chip shortage, and quarterly earnings that show significant declines in manufacturer profits, we aren’t too surprised to see automakers drastically increase their prices year-over-year. Toyota Tundra prices are a bit surprising though. With their redesign for the 2022 model year, Toyota has drastically increased their MSRP prices for the 2022 Toyota Tundra.

Let’s breakdown the new pricing from Toyota for 2022.

2022 Toyota Tundra Prices

New for 2022, Toyota has finally redesigned the Tundra. Exciting! What’s not so exciting is the year-over-year increase in MSRP for the truck.

On average the 2022 Tundra will cost 15% more than the prior model year. This is a HUGE increase year-over-year.

The Perfect Storm: Why Some New Car MSRPs Will Be 10% Higher in 2022

by Zach Shefska | Last updated Nov 19, 2021 | New Cars

Chip shortage? Check. Magnesium shortage? Check. Labor strikes? Check.

If you could wave a magic wand and imagine what a “perfect storm” scenario would look like to drastically reduce automakers production capabilities, you’d probably describe something like what we’ve seen in 2021. Whether it’s supply chain constrains, virus outbreaks, or workers who are simply quitting, automakers are facing a series of setbacks that are unprecedented in scope and scale.

This “perfect storm” has had meaningful and material impacts on the everyday consumer. Everything is more expensive. Not just cars, trucks, and SUVs (did we mention that wholesale used car prices have increased 40%+ in 2021 alone?), but in other categories such as household goods, food, and more. We’re in the perfect storm, and for better or worse, that’s going to have major impacts on our pocketbooks next year, in 2022.

How big will the impact be in 2022? What changes do we expect automakers to make heading into the new year? And most importantly, when will things “go back to normal” (or will they?)? We’ll answer these questions and more. Let’s dive in.

What got us here

Automakers, like all major manufacturers, operate on just-in-time (JIT) manufacturing practices. Just-in-time manufacturing is a business operating model where finished goods are created to meet demand. That’s it. Plain and simple. Finished goods are not created in surplus or in advance of any need. The benefit of JIT production is that the manufacturer can (in theory) avoid the waste associated with overproduction, the carrying costs of holding and storing inventory, and the burden of housing input materials that are necessary to create the finished good.

Henry Ford, in his 1923 book, My Life and Work describes just-in-time manufacturing:

We have found in buying materials that it is not worthwhile to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production. That would save a great deal of money, for it would give a very rapid turnover and thus decrease the amount of money tied up in materials.

For all the benefits that JIT brings, it also has some downsides; mainly, when one piece of the intricate global system that delivers input goods to manufacturing plants on-time goes down, the whole system can be effected. What does this mean? It means that if one component of a vehicle doesn’t make it just in time to a production facility, then the whole process can come to a standstill.

That’s exactly what happened towards the end of 2020 when automakers slashed their orders of many input components. With the uncertainty of what was going to happen as a result of the coronavirus pandemic, automakers did not want to hold onto excess inputs at their production facilities (remember, JIT requires you to only have what you need). What no automakers expected was for new vehicle demand to stay steady in 2021. The expectation was that consumer demand would decrease because of the pandemic, that never panned out.

For months major original equipment manufacturers (OEMs) struggled to get their hands on the materials they needed to produce vehicles. The component that became the most challenging to source was (and still is) integrated circuits (also called semiconductors, or chips). These circuits are everywhere in our cars. From turning on the air conditioning to changing your turn signal, ICs play a major role in how your vehicle operates.

We’ve documented the chip shortage at great length. Suffice it to say the auto industry’s commitment to JIT manufacturing has completely backfired. With demand for semiconductors through the roof, price gauging has become rampant. It’s a classic case of the golden rule: she who has the gold, rules. Whomever has the chips right now, they rule.

In addition to input costs rising, OEMs have been faced with other pandemic induced challenges. Manufacturing plant shutdowns because of the virus have been rampant in 2021.

Automakers have collectively lost over 3,000 production days in assembly plants so far in 2021. That data comes from Bill Rinna, LMC Automotive’s director of vehicle forecasts for the Americas.

The impacts we’ve seen so far

Used cars typically depreciate. Actually, let me rephrase that. Used cars depreciate. Never in history have we seen used vehicles appreciate in value like we are seeing so far in 2021.

Did you buy a brand new Toyota Camry three years ago and put a couple thousand miles on it? Guess what, you can sell it back to the dealer right now for likely exactly what you paid for it back then (or potentially more!). Seriously.

Because automakers have not been able to produce new vehicles at levels they expected to, used car prices have gone through the roof. New car prices have too. If a car does make it to a dealers lot, it is being sold with additional dealer markup (ADM) and all sorts of “accessories” or “add-ons” to boost dealer profit.

Know which fees you should and shouldn’t expect to pay. Read the full guide here!

The days of buying a car, truck, or SUV at invoice price are long gone. And the premise of buying a used car that has depreciated a bit, because it represents a “better deal” is entirely dead. In a market where new cars sell for significantly over MSRP, and used cars sell for more than their original MSRP, us consumers are at a loss. If you’ve tried to search for a car recently and said to yourself, “WTF!!!” you are not alone.

From the thousands of CarEdge members we help each month, we’ve seen most new car deals include at least $1,500 in additional “stuff”. This “stuff” can come in the form of dealer markup (market adjustments, additional dealer markup, etc.), accessories (appearance packages, protection packages, etc.), or general add-ons (window tint, nitrogen in the tires, etc.). If you’re able to buy a new car at MSRP without this additional markup/fees, that represents an incredible value right now.

The impacts we’ll see next year

MSRP stands for “manufacturers suggested retail price”. Over the past few months we’ve seen first-hand how important the word “suggested” is. Dealers have marked up their vehicles well above MSRP, and consumers are paying. With such limited supply, dealers are able to make ridiculous amounts of profit. Every publicly traded auto dealer made record profit in Q3 of 2021 as a result of this.

Next year we don’t think dealers will be able to make quite as much money. Why? Because the OEMs are going to get in on the fun — they’re going to drastically increase the MSRP. This won’t inherently stop car dealers from marking up even further past the MSRP, however we expect and anticipate very significant increases in MSRP for all new vehicles for the next model year.

We’ve already begun to see this. Tesla recently increased the price of its model S and Y by $2,000, followed by a $5,000 hike on for the model X and S.

Other automakers are already doing the same thing. The MSRP on a base Ram 2500 has increased 5% from 2021 to 2022 for example. We expect, and wouldn’t be surprised if more automakers increase their MSRP by double-digits in 2022.

The impacts we’ll see forever

Many of the major automakers have already signaled that they like their dealers having less inventory. The United States is the only major market where car dealerships have massive lots full of inventory. In many markets the dealership is simply a showroom with customers placing orders for the vehicles they want.

As more and more manufactures aspire to provide a “Tesla” like experience, we would not be surprised to see less inventory on dealer’s lots, and more factory orders.

Factory orders will also become more of the norm. Consumers may go to a dealership to test drive and “experience” a new car, but instead of buying it right there on the spot, they’ll place an order. This is a common practice in Europe and other major markets, however in the US it has never caught on. That’s likely going to change.

Under $20,000 Cars? There Are Only Seven Options.

by Zach Shefska | Last updated Apr 20, 2023 | New Cars

Do you remember when new cars cost less than $20,000? Well, those days are officially behind us. As of November 1st, 2021, there are only seven new cars that you can purchase for under $20,000. And, with used cars appreciating in value, there are even fewer used options below the “magic” $20,000 threshold.

The average new car price now tops $45,000. Finding a new car that is (dare we say) “affordable” is pretty much impossible. During the ongoing chip shortage, automakers cut their production of less expensive and lower margin vehicles. Instead, they allocated supplies towards their higher profit, more expensive vehicles.

As a result we have seen dramatic price increases among sub-compact and compact sedans and SUVs on the used car market. Finding a sub $20,000 new car that is actually in stock is borderline impossible. What under $20,000 cars are there? Let’s break it down.

Kia Rio

A base 2022 Kia Rio LX has an MSRP of $17,145. Depending on sales tax and dealer fees, you might be able to get “out the door” for less than $20,000 on a Kia Rio. The challenge will be finding one that’s available and on a dealer’s lot.

I found less than 10 Kia Rios in inventory and for sale in the United States under $20,000. This one for example was listed as available on Kia’s website, but when you ran a CarEdge analysis report on it it was obviously already sold.

Subaru Impreza

As surprise to some, the Subaru Impreza can be had for less than $20,000! All-in the total price (including dealer fees and taxes) will certainly be above the $20,000 threshold, however the base MSRP is just shy of $20,000.

Thinking about buying an extended warranty? Get a free quote from CarEdge first!

Volkswagen Jetta

Another surprise entry in the under $20,000 car category is the base Volkswagen Jetta. The cheapest configuration of the Jetta comes in at $19,990. Good luck finding a Jetta for less than $20,000 in inventory nationwide. During my research I was unable to find a single Jetta in inventory with an MSRP below $20,000.

Chevrolet Spark

The Chevrolet Spark sneaks into the under $20,000 car club. During my research, I was able to find two Chevy Sparks for sale under $20,000 that are actually in inventory right now in the entire United States.

If you’re looking for an under $20,000 option, the Chevy Spark is a legitimate option in today’s market.

Mitsubishi Mirage

I was able to find hundreds of Mitsubishi Mirages for sale in the United States for less than $20,000. Crazy enough, used Mirages are actually selling for close to what you can purchase a new one for.

The Mitsubishi Mirage is the used car that has appreciated in value the most so far in 2021 as a used vehicle. Up more than 50% in value.

Hyundai Venue

The Hyundai Venue, which came to market for the 2020 model year, is another under $20,000 options for SUV shoppers. At $19,935, the Venue is an affordable option for consumers.

Sadly, I could not locate a single Hyundai Venue in inventory that was listed for less than $20,000.

Nissan Versa

Last but not least on the list of under $20,000 you can buy in 2021 … The Nissan Versa. This subcompact is comparable to the Mitsubishi Mirage, and it’s in inventory too!

Let us help you buy your under $20,000 car

If you’re thinking about buying a car in today’s challenging market, let CarEdge help you. Whether it’s our professional car buying coaches, email templates you can use to negotiate with the dealer, or community forum with support and suggestions, we’re here to help you.