Destination charges have been rising industry wide. No one knows why. Automakers are aware of it as well. It’s why they advertise vehicle MSRP’s without them. And the charges vary between vehicles and make no sense. A basic Cadillac CT4 has a $1,195 destination charge while a CT4-V Blackwing has a $995 destination charge. Could it be greed? Apparently, some customers think so, as Car Complaints and GM Authority report a class action suit has been filed against GM over the charges.
Destination fees generally range from $995 to about $1,700 and vary model by model, as TrueCar notes, but don’t vary depending on the distance. For example, a destination fee for a buyer living near the BMW plant in Spartanburg, South Carolina would be the same as a buyer of the same model two thousand miles away. Automakers claim they don’t make a profit.
In this suit, however, filed in the Southern District of California, the plaintiffs have alleged that GM makes a profit off of the charges and that GM “deceives customers into paying far more than the actual cost of vehicle delivery.” All of this is over a grand or two; California plaintiff Robert Romoff paid a $1,195 destination charge on a 2021 Chevy Equinox and New Jersey plaintiff Joe Siciliano paid a $995 destination charge on a 2019 Cadillac Escalade. Car Complaints quotes the suit:
“[A] destination fee is generally understood in the automotive industry to reflect the manufacturer’s average cost of delivering one of its vehicles to a dealership. That destination fee is charged to the dealer and passed on to the purchaser or lessee of that vehicle. Consumers similarly have the expectation that they are covering an automotive manufacturer’s cost for the delivery of the manufacturer’s vehicles when paying the “destination fee” as part of their new-vehicle lease or purchase.”
Both plaintiffs claim they did not know that GM makes a profit from its destination charges, and argue they were misled.
The suit essentially claims destination charges are bullshit and have little to do with anything involving the transportation of the vehicle. GM hasn’t responded to the suit. But the fact that charges are the same for a person living 30 miles from the factory being the same for someone living on the other side of the country suggests it’s all profits for automakers.