As if semiconductor shortages and COVID-19 haven’t raised car costs enough, automakers are raising hidden fees that top buyers don’t make, and that no one gets to understand.
Respect the destination rate, also known as the penultimate line on the window label, shipping prices, and that $2,000 asterisk.
I would like to tell you exactly what a destination tax is, however, none of the car brands happen to know it, and the car brands do not communicate about it.
The first rule of destination fares turns out to be: “Do not communicate about destination fares”.
However, it’s clear: they’re emerging faster than inflation and tend to outsstrete cars for which there’s a primary demand, such as pickup trucks and SUVs. in fewer increases.
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Destination rates are included in the manufacturer’s recommended retail value, or MSRP, the value advertised through automakers and dealers.
A cynical suspect makes mischief.
“Some automakers use destination rates to generate profit in a way that buyers don’t realize until they’re overdue in the buying process,” said Mike Monticello, senior director of road testing and overhauls at Consumer Reports.
“We deserve regulations that include destination fares in the advertised price, not in a footnote. “
Neither the automakers nor the dealers I contacted for this column discussed what fits into the destination rate definition.
Destination rates were solid for years, however, Consumer Reports found that they had a higher inflation rate at 2. 5 times since 2011, from $839 to $1244.
The destination payment for the cars I tested recently rises from $945 for a Mazda 6, a sedan that sold so slowly that Mazda removed it from the 2022 lineup, to $2,000 for a sumptuous Jeep Grand Wagoneer that will almost certainly be one of the rides of the fall.
The Grand Wagoneer is much larger than the 6, which could be part of the difference, but it’s not 3 times bigger, although from dollars to donuts, it will be more than 3 times more popular.
The comparison of destination payments for the new 2022 Toyota Corolla Cross subcompact SUV and the 2021 Corolla sedan undermines any correlation between payments at destination and vehicle size.
The destination payment for the sedan is $1,025. The Corolla Cross SUV, with the same architecture as the sedan and a shorter size of 6. 7 inches, comes with a destination payment of $1,215.
To be fair, the Corolla Cross weighs 215 pounds than the sedan.
I’ll do the math: $190 more for sending 215 pounds is 88 cents a pound. At this rate for the entire car, the destination payment for the sedan would have been $2,571.
It’s less difficult to draw a line between much and the more likely popularity of vehicles. Sales of compact sedans are down. Small SUVs are booming.
The causal correlation, however, here are a few other numbers: the Ford F-150, the best-selling vehicle in the U. S. USA Since the invention of the wheel, it has a destination payment of $1,695, compared to $995 for the sports Cadillac CT5. Sedan, a slow distributor built on one of GM’s first assembly lines, went dormant when the semiconductor crisis hit.
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A federal law requires automakers to disclose destination rates on the window label, which includes other data such as features, options, government protection ratings, EPA emissions and fuel economy estimates, and the vehicle and its main parts were built.
The window decal is also named Monroney, after U. S. Senator Mike Monroney, an Oklahoma Democrat who sponsored the Automotive Disclosure Act of 1958, a first customer coverage law. included the list of transportation costs.
Theoretically, payment at destination is basically composed of the charge of shipping the vehicle from its factory – or port of entry, for imports – to the broker promoting it, possibly there would also be some payment to the broker for refueling, inspection and cleaning of the vehicle.
Destination rates vary from country to country, depending on the shipping distance of the vehicle.
This gave the distributors near the meeting plant a merit they loved, but the remote ones didn’t. Happy dealerships make auto executives happy, so automakers have followed a national average for shipping costs. It’s the same in the United States, with a few exceptions.
Car brands and dealers check to justify destination rates by claiming that the Monroney Act obliges them. That is incorrect. The law states that transportation costs, “if any,” must be disclosed. It doesn’t say they want to be evaluated.
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If this starts to make sense for you, check it out for yourself: destination rates don’t come with shipping prices from overseas factories, but are included in the vehicle’s suggested retail price.
Why do it with shipping costs to the U. S. ?U. S. , Questions?
There is no reason, unless a user who suspects mischief can say that the charge would then be a component of the MSRP used in advertising.
Price transparency is customer-friendly. People are noticing a buildup in MSRP.
Instead, destination fees are analyzed in the same sentence as taxes, licenses, and registration, which gives the impression that the automaker has nothing to do with it.
No other regime transaction in person paints this way. It’s like buying a $99. 99 toaster oven from Meijer, and when the cashier added sales tax, he also added $5 to cover the truck that delivered it to the store.
“If I buy a couch, I pay for delivery at my house, but also at the store,” Said Consumer Reports’ Monticello.
“There is a rule that comes with destination fares in the advertised price, not as a footnote. “
Or it may simply be a component of the vehicle’s value, such as the guide wheel load and the metal used to make the vehicle.
Is it so difficult?
Contact Mark Phelan at 313-222-6731 or mmphelan@freepress. com. Follow him on Twitter @mark_phelan.