When most automakers display their advertised prices, they do so with a little asterisk. Click it open, and it will lead you to some fine print you should read closely. It will tell you about the $1,000 to $2,000 dollars that the automaker’s big bold font MSRP doesn’t include that you will be paying when you settle up. There is no law that requires an automaker to hide this fee. Some do include it in the prices they advertiese, but that is rare.
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What Are Destination Fees?
These destination charges, aka delivery fee, aka delivery charges, are imposed by your dealer and manufacturer in conjunction. Yes, Tesla also charges them. And yes, you pay it even if you take delivery in the same place the vehicle is built. There is no requirement that automakers charge you a destination fee. They could simply roll it into the cost of their products like every other product we purchase. This is a legal loophole that allows automakers to pretend their vehicles cost you less than they actually do. And the amounts that they charge have been growing rapidly.
Why Are Destination Fees Rising?
Consumer Reports highlights this flim-flam in its latest episode of Talking Cars. In some cases, manufacturers have doubled the delivery fees over a very short handful of years. Consumer Reports also names the company and its brands that charge the highest destination fees - now over $2,000.
Forget Logic and Laws When It Comes To Destination Fees
There is no rhyme or reason to the fees automakers opt to charge. Tesla builds its products sold in America in California. Tesla charges $1,200. Mazda builds nearly all of the cars it sells in America in Japan and Charges $945. There is also no truth to the myth that all of the destination fees charged in all places must be the same. Mazda charges $45 less to ship its cars to Alaska than other US states.
The delivery fee adds no value to your purchase. It is a way for a manufacturer to display to you a price lower than you think you are actually paying. By the time you figure it out, if you ever do, you are emotionally invested in the purchase.
Why Does Tesla Charge Destination Fees?
Tesla’s destination fee is now $1,200 and it’s easy to miss when you use the online configurator. Since Tesla is the manufacturer, and since there is no dealer between you and Telsa when you buy one, the term “Manufacturer’s Suggested Retail Price” is silly. It's equally silly to suggest that Tesla is forced to charge itself a destination fee. Tesla is the manufacturer. They can charge you whatever they want and don’t need pretense. Why don’t they just show the total price on every screen? Wasn't Tesla supposed to be the company that would "break the wheel" and stop all of the dealer silliness we have to tolerate from other brands?
What You Can Do About Destination Fees
So what can you do about these shady extra fees that your dealer and manufacturer are collaborating to charge you? One thing is to always give the dealer and manufacturer the lowest possible score on any survey you receive. In the comment box write, “I feel that hidden fees like destination charges are unethical and should be eliminated.” Then add nice things about the purchase you wish to say and write, "I would have socred the experience higher if not for the hidden fees." You can also place a comment under any automotive media story that discusses prices, but which does not include or highlight the destination fee. Ask that publication in their comments section why they are collaborating with automakers show a lower than actual cost.
How To Avoid Paying Destination Fees
You will be paying the destination fee directly to the dealer, so it is important to understand what your total cost will be when you shop. The difference in destination charges between different brands can be as much as $1,000. How can you avoid paying them? Simple: When you shop for your next vehicle, always ask the dealer to show you what the destination charges will be before you begin to negotiate. Then stop and ask them if they will in turn discount the total price by at least that amount. If they will not, leave.
John Goreham is a long-time New England Motor Press Association member and recovering engineer. Following his engineering program, John also completed a marketing program at Northeastern University and worked with automotive component manufacturers. In addition to Torque News, John's work has appeared in print in dozens of American newspapers and he provides reviews to many vehicle shopping sites. You can follow John on Twitter, and view his credentials at Linkedin