Why Are Destination Fees So High?
About this episode
The podcast dives into the rising destination fees on new cars with Consumer Reports' Jeff Bartlett, exploring why these fees have surged, their breakdown, and how automakers use them strategically. The discussion highlights the lack of transparency and the impact on buyers' budgets. Additionally, the hosts chat about cordless pressure washers as handy tools for car cleaning and analyze a recent caution-heavy NASCAR race at Phoenix, discussing tire issues, race dynamics, and upcoming events like the Vegas race. The episode blends practical car buying insights with enthusiast topics like racing and car care.
destination fees
"...we'll be talking about one thing that new car buyers have to deal with every time they buy a car. Something we don't talk about a lot because it's kind of taken for granted in the industry, but it's destination fees on new cars. Most of our listeners know what destination delivery fees are."
Destination fees are extra costs you pay when buying a new car. They cover getting the car from where it's made to the dealer where you buy it.
Destination fees are charges added to the price of a new car to cover the cost of transporting the vehicle from the factory to the dealership. These fees are typically non-negotiable and are a standard part of new car transactions.
Mazda Cx5
"Why has there been such a high increase, such a short amount of time? You use an example in your article of a gentleman who had just purchased a Mazda CX-5 in 2019, and it was up 30% over 2016."
The Mazda CX-5 is a small SUV made by Mazda that is good for families and everyday use. It drives well and has a nice inside with comfortable seats. It has become more expensive over the years because more people want to buy it.
The Mazda CX-5 is a compact crossover SUV known for its sporty handling, upscale interior, and strong fuel economy. Since its introduction, it has become popular among buyers looking for a practical yet engaging vehicle. Price increases over recent years reflect its rising demand and improvements in features and technology.
Monroney
"these destination fees are on a Monroney, and I think a lot of people know to look for them, particularly I think car enthusiasts and our listeners. But I think a lot of car buyers who aren't familiar with the industry don't know that. And I also think, as you say, it's kind of destination fees are not baked into the prices in car ads, they're not baked into the MSRP. Usually you have your, if you look at a Monroney, you have your MSRP for the base price, then you have one with options, and depending on the automaker, sometimes, most automakers I think, if I don't have a Monroney right in front of me, actually I do, most of the automakers have the destination fee listed separately."
A Monroney sticker is the official sticker you see on new cars in the US. It shows the car's price, extra features, and fees so you know how much the car really costs.
A Monroney sticker, also known as the window sticker, is a label required by law in the United States to be displayed on all new cars. It lists the car's MSRP, options, destination fees, and other important information to help buyers understand the full price.
Dodge Charger
"Like this 1973 Dodge Charger on eBay that has been tucked away in an Arizona barn for over 40 years. Only 55,000 miles and somehow in great running order."
The 1973 Dodge Charger is an old, strong car made in America that many car fans like because it has a big engine and cool looks.
The 1973 Dodge Charger is a classic American muscle car known for its powerful V8 engines and distinctive styling. It is part of the second generation of Chargers produced from 1971 to 1974.
dealer prep fee
"In fact, often shoppers will encounter a dealer prep fee that gets tacked on to a Yeah, I've seen that. Yeah, you know, say 300 bucks to prepare the car."
Dealers sometimes charge a fee to get a new car ready for you. This fee pays for things like cleaning the car and checking it before you drive it home.
The dealer prep fee is a charge some dealerships add to cover the cost of preparing a new car for sale. This can include cleaning, removing protective films, and inspecting the vehicle for damage before delivery. Unlike the destination fee, this fee may sometimes be negotiable depending on the dealer.
SUV
"Ford and General Motors blamed the popularity of SUVs and trucks because according to them, you can't fit as many trucks and SUVs on a car carrier because they're bigger vehicles, right?"
An SUV is a bigger type of car that can carry more people and sometimes drive off-road. Because they are bigger, they take up more space when being shipped.
SUV stands for Sport Utility Vehicle, a type of larger vehicle designed for passenger comfort and off-road capability. SUVs generally take up more space than sedans, affecting transportation and shipping logistics.
car carrier
"Ford and General Motors blamed the popularity of SUVs and trucks because according to them, you can't fit as many trucks and SUVs on a car carrier because they're bigger vehicles, right?"
A car carrier is a big truck that carries many cars at once from where they are made to the car dealer.
A car carrier is a specialized truck or trailer designed to transport multiple vehicles from factories to dealerships. Its capacity depends on the size of the vehicles being transported.
pickup truck
"Why are Ford and GM blaming trucks? Is it just an excuse? Is it because they sell more pickup trucks?"
A pickup truck is a type of vehicle with a cabin for people and a flat open area in the back to carry things. They are usually bigger than cars and can cost more to ship.
A pickup truck is a light-duty truck with an enclosed cab and an open cargo area with low sides and tailgate. Pickup trucks are popular in North America and tend to be larger, affecting shipping and destination fees.
MSRP
"...if the automaker was just paying for it and not trying to voice that on customers, then the MSRP would be higher. I always use the example of bags and airlines..."
MSRP is the price the car maker says a new car should cost. It doesn't usually include extra fees like shipping or dealer costs.
MSRP stands for Manufacturer's Suggested Retail Price, which is the price a car manufacturer recommends a dealer charge for a vehicle. It typically does not include additional fees like destination charges or dealer add-ons.
negotiation
"I mean, it's one of the few things where you can negotiate a price, you know, you go to Best Buy to buy a TV, the TV is what it costs, what it costs."
Negotiation means talking with the seller to try to get a better price or deal when buying a car. Unlike buying things like TVs, car prices can often be changed by asking.
Negotiation in car buying refers to the process where the buyer and seller discuss the price and terms of the sale to reach a mutually agreeable deal. Unlike many retail products with fixed prices, car prices can often be negotiated.
fixed price
"I bought a new TV a few months back... and, you know, I paid whatever, whatever it was plus tax and boom, you know, done."
Fixed price means the price you see is the price you pay, and you usually can't change it. This is common for things like TVs or refrigerators.
A fixed price means the cost of a product or service is set and non-negotiable. Most retail products like TVs or appliances have fixed prices, unlike cars which often allow negotiation.
car buying cycle
"With a car, you're dealing with a purchase on average every five years is the typical cycle in America."
People usually buy a new car every five years or so. This is called the car buying cycle, and it affects how often you shop for cars.
The car buying cycle refers to the average frequency with which consumers purchase new vehicles. In the U.S., this cycle is typically around every five years, influencing how buyers approach negotiations and purchases.
Ford
"We've already talked a little bit about Ford and GM blaming trucks. And you've already mentioned Alfa Romeo with being built overseas and having a high destination because of that. But I wanted to get into Stellantis a little bit and Ford, not as much, but looking at chart that you produce,"
Ford is a big car company from the United States that makes many kinds of cars and trucks. People often talk about Ford when discussing car prices and extra fees.
Ford is a major American automotive manufacturer known for producing a wide range of vehicles including trucks, SUVs, and passenger cars. It is often discussed in the context of pricing and destination fees due to its large market presence.
General Motors
"We've already talked a little bit about Ford and GM blaming trucks. And you've already mentioned Alfa Romeo with being built overseas and having a high destination because of that."
General Motors, or GM, is a big car company in the U.S. that makes cars and trucks under brands like Chevrolet and Cadillac. People talk about GM when discussing car prices and fees.
General Motors (GM) is a large American automotive manufacturer that produces brands like Chevrolet, GMC, Cadillac, and Buick. GM is often referenced in discussions about vehicle pricing and destination fees, especially for trucks.
Alfa Romeo
"And you've already mentioned Alfa Romeo with being built overseas and having a high destination because of that. But I wanted to get into Stellantis a little bit and Ford, not as much,"
Alfa Romeo is a car brand from Italy that makes sporty and fancy cars. Because their cars are made in other countries, it can cost more to get them to dealers.
Alfa Romeo is an Italian automotive brand known for producing sporty and luxury vehicles. Many Alfa Romeo models are built overseas, which can lead to higher destination fees due to international shipping costs.
Stellantis
"But I wanted to get into Stellantis a little bit and Ford, not as much, but looking at chart that you produce, the consumer reports, it's clear that Ford is the second highest on the average. And then Stellantis is really the highest. And I've noticed that too, just, just reviewing cars for a living and going on first drive events."
Stellantis is a big car company made by joining two other companies. It owns many car brands like Alfa Romeo and Jeep. They often charge higher fees to get cars to dealers.
Stellantis is a multinational automotive manufacturing corporation formed from the merger of Fiat Chrysler Automobiles and PSA Group. It includes brands such as Alfa Romeo, Fiat, Jeep, Dodge, and Ram. Stellantis is noted for having some of the highest destination fees across its brands.
Toyota
"Stellantis, we'll just look at the chart, which compares Stellantis for General Motors, Honda and Toyota."
Toyota is a big car company from Japan that makes cars known for being reliable and good on gas.
Toyota is a Japanese automotive manufacturer known worldwide for producing reliable and fuel-efficient vehicles like the Camry and Corolla.
Honda
"Stellantis, we'll just look at the chart, which compares Stellantis for General Motors, Honda and Toyota."
Honda is a company from Japan that makes cars and motorcycles. Their cars are known for being reliable and easy to drive.
Honda is a Japanese automotive manufacturer known for reliable cars and motorcycles, with popular models like the Civic and Accord.
Mercedes-Benz
"Three of the least expensive are Mercedes, Toyota and BMW. This might be the only context which are Mercedes and BMW are less than most other brands by any measure. So that fascinates me as well. Yeah, I have to wonder part of part is because so many BMWs and Mercedes are built in the south and have a shorter transit than maybe a Ford built in Canada."
Mercedes-Benz is a famous car company from Germany that makes fancy and comfortable cars and SUVs. People often think of it as a brand that builds high-quality and luxurious vehicles.
Mercedes-Benz is a German luxury automotive brand known for its premium cars, SUVs, and commercial vehicles. It is often associated with high build quality, advanced technology, and luxury features.
BMW
"Three of the least expensive are Mercedes, Toyota and BMW. This might be the only context which are Mercedes and BMW are less than most other brands by any measure. So that fascinates me as well. Yeah, I have to wonder part of part is because so many BMWs and Mercedes are built in the south and have a shorter transit than maybe a Ford built in Canada."
BMW is a car company from Germany that makes cars known for being fun to drive and comfortable. They make many types of cars including sporty ones and family SUVs.
BMW is a German automotive brand known for its sporty and luxury vehicles, including sedans, SUVs, and sports cars. It emphasizes driving dynamics and performance.
rail shipping
"And then two, how much does rail shipping play apart? We've been talking about trucking and the cost of fuel and all that. But some vehicles are shipped by rail, at least part of the journey as well. Does that play a part at all? ... And I don't know up top of my head how much rail is used. I believe rail in some cases is used"
Rail shipping means moving cars on trains to get them from the factory to the place where they will be sold. Sometimes it's faster or easier than using trucks, especially for long trips.
Rail shipping refers to transporting vehicles by train as part of their journey from factory to dealership. It is often used for long distances or to reach areas less accessible by road.
destination charges
"But rail, truck, however the vehicles are delivered, that is all rolled into destination charges. And like you said, what's going to impact that is how far the vehicles have to travel. So models that are built in the U.S. obviously don't have to go as far, but their costs are averaged over the entire country."
Destination charges are extra costs added to a new car's price to pay for moving the car from where it was made to the dealership. The farther the car has to travel, the higher this fee can be.
Destination charges are fees that cover the cost of transporting a new vehicle from the factory to the dealership. These fees are included in the vehicle's price and vary based on distance, shipping method, and logistics.
tariffs
"In terms of destination charges, I don't think that had nearly the impact that the tariffs did. Makes sense. It makes sense. Yeah. They're shipping fewer because obviously sales dipped, but it didn't increase the costs in quite the same way, at least to my recollection."
Tariffs are extra taxes added when cars are brought into a country from somewhere else. These taxes can make cars more expensive to buy.
Tariffs are taxes imposed on imported goods, including vehicles, which can increase the cost of cars. They can impact destination charges indirectly by affecting overall shipping and production costs.
Consumer Reports
"especially if you're buying a new car. So again, Jeff Bartlett, the managing editor at Consumer Reports for the car group. And Jeff, thank you so much for your time talking destination fees this week on the Truth About Cars podcast. Oh, thank you. I enjoyed it. We enjoyed having you on. And also, before we go, just a quick note to our listeners, Consumer Reports offers TTAC listeners a slight discount,"
Consumer Reports is a group that tests and reviews products, like cars, to help people know which ones are good before they buy.
Consumer Reports is a nonprofit organization known for unbiased product testing and reviews, including cars. They provide ratings and advice to help consumers make informed purchasing decisions.
eBay
"This message comes from eBay, the worst part about loving cars might just be buying them and all the parts from Toyota's to Aston Martin's. eBay has thousands of cars and the largest online selection of vehicle parts and accessories."
eBay is a website where people can buy and sell things, including cars and car parts, from all over the world.
eBay is a global online marketplace where users can buy and sell a wide variety of items, including cars and automotive parts. It offers one of the largest selections of vehicle parts and accessories online.
Aston Martin
"and all the parts from Toyota's to Aston Martin's. eBay has thousands of cars and the largest online selection of vehicle parts and accessories."
Aston Martin is a fancy car company from Britain that makes fast and stylish sports cars.
Aston Martin is a British luxury automotive brand famous for its high-performance sports cars and grand tourers. It is often associated with elegance and exclusivity.
pressure washer
"...So we're discussing pressure washers today, which is a good, I used to have a good time of year to discuss that because we're getting into spring. Spring means rain. It means mud. It means dirt. It means washing all the winter's salt and grime off of your vehicles..."
A pressure washer is a tool that sprays water very fast and strong to clean things like cars and dirt. It's stronger than just using a normal garden hose and helps get things really clean.
A pressure washer is a device that uses a high-pressure water spray to remove dirt, grime, mud, and other contaminants from surfaces such as vehicles, buildings, and equipment. They come in various types, including gas-powered and electric, and are commonly used for cleaning tasks that require more power than a regular hose.
psi
"It was almost a 900 psi, which is, I think, great for such a small portable, compact tool."
PSI means how strong the water comes out of the pressure washer. Higher PSI means the water sprays harder and cleans better.
PSI stands for pounds per square inch and is a unit of pressure measurement. In the context of pressure washers, it indicates the force of the water spray.
IndyCar
"and NASCAR in the same track, the same weekend as different days. So IndyCar was at Phoenix on Saturday. And then I don't think it was the exact same time, start time."
IndyCar is a type of car racing where drivers race very fast cars that look different from NASCAR cars. The cars have wheels that stick out and race on different types of tracks.
IndyCar is a premier American open-wheel racing series known for high-speed races on oval, road, and street circuits, including the famous Indianapolis 500. It features single-seater cars with exposed wheels.
NASCAR
"and NASCAR in the same track, the same weekend as different days. So IndyCar was at Phoenix on Saturday. And then I don't think it was the exact same time, start time."
NASCAR is a type of car racing where drivers race special cars on oval tracks. It's very popular in America and lots of people watch it on TV.
NASCAR (National Association for Stock Car Auto Racing) is a popular American motorsport series featuring stock car racing on oval and road courses. It is known for its close competition and large fan base, especially in the United States.
Goodyear
"This time it wasn't Goodyear's fault. You know, sometimes we do definitely burn Goodyear for having, you know, bringing the wrong compound or whatever the case may be."
Goodyear makes the special tires that NASCAR cars use during races. These tires are built to handle very fast speeds and tough driving.
Goodyear is a major tire manufacturer and the official tire supplier for NASCAR. They provide specialized racing tires designed to handle the extreme conditions of motorsport events.
tire pressure
"all right, so your left front is going to be 14 psi. We recommend 30 psi for the right front. And all of those different very specific numbers."
Tire pressure means how much air is inside a tire. Racing teams change this to make the car handle better or make the tires last longer.
Tire pressure is the amount of air inside a tire, measured in pounds per square inch (psi). In racing, teams adjust tire pressures to balance grip and tire wear, often pushing limits to gain performance.
rotor
"Noah Gregson's issue notwithstanding, that was where he broke a rotor, rotor flew apart."
A rotor is a metal disc that helps slow down the car when the brakes are applied. The brake pads squeeze this disc to stop the car.
A rotor is a key component of a disc brake system. It is a flat, round metal disc that the brake pads clamp onto to slow down or stop the vehicle. In racing, rotors can be subjected to extreme stress and may fail.
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