Destination fees are the worst new car costs

The price you see is unfortunately not the price you pay when you buy a new car. Once you accept the MSRP, or perhaps haggle for a lower price, there are the dreaded destination charges. These days, those fees typically add at least $ 1,000 to the price of your shiny new car. So, what gives?

Consumer Reports recently looked at the increase in destination fees and found that they had gone from an average of $ 839 in 2011 to $ 1,244 in 2020, a massive 48% increase in less than a decade. During the same period, the average price of a new car increased “only” by 27%. I join with CR in asking that the destination charge be part of the MSRP and not a footnote.

Even if it were integrated with the MSRP, another problem would persist: the distance to a buyer’s destination. Yes, cars are big, heavy things that have to travel thousands of miles to buyers – except when they don’t. How many people in the suburbs of Detroit live a few miles from the Ford plant in Wayne, Michigan, but paid the same destination fee of $ 1,195 on a new Ford Ranger that I would pay here in San Francisco? The same could be asked of new Hyundai Sonata buyers in Alabama who paid $ 1,005 to ship a car made in Montgomery, Alabama.

Destination fees are probably a good profit center for automakers, but I can’t say for sure as there is little transparency about what makes them up or why they differ drastically between makes and models. But I think shipping and dealer readiness is as essential a part of getting a car to market as performing crash tests and should be built into the MSRP in the same way.

Watch my video to find out why destination fees continue as they have for generations and what keeps any automaker from breaking this expensive tradition.