New car destination fees are the most expensive

Have you ever wondered why you have to pay a destination charge? Here's how those dollars work, and why they keep rising.    When you shop for a new car, the price you see is not the price you pay. There's the dreaded destination charge after you've agreed to the MSRP or haggled your way to a lower price. A shiny, new car today typically costs at least $1,000 more because of this fee. Why is this happening?    Consumer Reports examined destination fees recently and found they have risen from $839 in 2011 to $1,244 in 2020, a 48% increase in less than a decade. A new car's average price has risen by only 27% over the same period. CR and I are calling for destination fees to be part of MSRP, not an add-on.

Have you ever wondered why you have to pay a destination charge? Here's how those dollars work, and why they keep rising.


When you shop for a new car, the price you see is not the price you pay. There's the dreaded destination charge after you've agreed to the MSRP or haggled your way to a lower price. A shiny, new car today typically costs at least $1,000 more because of this fee. Why is this happening?


Consumer Reports examined destination fees recently and found they have risen from $839 in 2011 to $1,244 in 2020, a 48% increase in less than a decade. A new car's average price has risen by only 27% over the same period. CR and I are calling for destination fees to be part of MSRP, not an add-on.


MSRP would not resolve another issue: distance from a buyer's destination. A car is a big, heavy object that travels a lot for its buyer - except when it doesn't. Many suburban Detroiters live a few miles from the Ford plant in Wayne, Michigan, yet they pay the same $1,195 destination fee on a new Ford Ranger that I would pay here in San Francisco? It might be asked the same question of new Hyundai Sonata buyers in Alabama who paid $1,005 to ship a car made in Montgomery, Alabama.


There is little transparency about what goes into destination fees or why they differ so dramatically between makes and models, so I cannot say definitively that they are a nice profit center for carmakers. I believe shipping and dealer prep are important factors when bringing a car to market, and they should also be incorporated into MSRP. 


Discover why car manufacturers are not willing to break with the pricey tradition of destination fees by watching my video. 


source:cnet

 

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