Recent data shows that the average cost of new vehicles in America has reached an all time high. Destination fees, however, have reached new levels.
Edmunds data shows that the average destination charge/fee that automakers add to any vehicle that is new has increased by 12 percent from the 2017 model year. Some brands charge more than others. For example, Ford’s destination fees are 29 percent higher than they were in 2017, as are Porsche’s. General Motors has increased its fees more than 20% since 2017, including from Honda, General Motors (GM), Hyundai, Kia and Nissan as well.
The Grand Wagoneer 2022 Jeep Wagoneer is an extreme example. These SUVs come with a $2,000 destination cost, which is nearly double what Jeep charges for their vehicles in 2016, at $995. Six full-size pickup trucks with light duty are sold in the U.S. and shipping fees add $1695.
Car manufacturers often refuse to reveal how they charge destination fees. Some consumers believe they are being increased for profit. According to GM, a vehicle’s size factors into shipping fees, noting that “it typically costs less to transport smaller vehicles versus larger vehicles.”
See also: Dealership earnings at record highs. Profits up 65 percent on new cars and 36 percent for used
“The nuance is automakers aren’t supposed to make money on that line item per se; it’s not supposed to be a place for hidden profits,” J.D. Power’s vice president of data and analytics, Tyson Jominy said. “The agreement, at least historically, was you kind of want to get that number as close to breakeven as you can.”
Jeep dealer Steve Wolf told Auto NewsAlthough destination fees are not typically included in the advertised price, they seldom impact sales.
“Most of the time, they don’t even see it really because it’s embedded in the invoice,” Wolf said. “It adds to the cost of the vehicle, but in my experience, it’s very rarely an issue.”
Not all brands have raised shipping costs in recent years. In fact, BMW’s fees have remained stable at $995 for many years and haven’t even tracked the rate of inflation. Infiniti (Lexus), Mercedes-Benz, Mercedes-Benz, Volvo and Volvo all closely track inflation.
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