The Nonnegotiable “Destination Charge” Is Increasing Rapidly

November 15, 2021

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.

2021 Model year avg.Change from 2017 model year
BMW$973–17%
Ford$1,39329%
GM$1,24221%
Honda$1,20423%
Hyundai/Kia$1,10423%
Mercedes-Benz$1,09718%
Nissan$1,23624%
Porsche$1,35029%
Stellantis$1,57316%
Subaru$99618%
Tata$1,19520%
Tesla$1,2005.9%
Toyota$1,12715%
Volkswagen$1,207–0.3%
Industry average$1,22012%

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.

COVERAGE YOU CAN TRUST

CarEdge Extended Warranty

Peace of mind without the markup.
Flexible terms & pricing.
Coverage details

 

Discover the right insurance for you

Compare different providers with no spam phone calls:

Call us 855.786.1144

M-F: 8AM – 9PM EST
Sat: 10AM – 6PM EST

Save more with CarEdge+

CarEdge+ Membership pays for itself for all things auto.

Unlimited access to CarEdge car buying tools, our team of Auto Experts, savings on maintenance, and repairs, and more.

Join CarEdge+
Learn More

Join CarEdge for Free

Get instant access to members-only resources.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Consultations

$50 per 15-minute live session

Chat with a CarEdge Auto Expert to make sure you’re negotiating a fair deal.

  • Connect live on video or call.
  • Get live advice on any part of the buying process.
  • Ask us anything about your journey.

CarEdge Coach

$99 one-time

Partner with a dedicated coach to help you save thousands on your car deal.

  • Your coach will guide and assist through your journey.
  • Access to all premium resources, like Deal School 3.0, email templates and market pricing!
  • Learn how to buy a car with leverage and confidence.

CarEdge Concierge

$999 one-time

A dedicated concierge to handle all aspects of your car deal for you.

  • Concierge handles all communication with the dealer.
  • We negotiate the selling price, trade in, financing, warranties and insurance.
  • We listen, do the leg work and secure your deal.

Auto insights. Right in your inbox.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Get the latest trends and money-saving strategies, once a week.

We'll email you updates
Or, we can text you
Hidden
Subscribe to receive:

Related articles

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Share This