Sure, it would be nice if new cars just appeared in your driveway, but that’s not how things work. Between the factories where they’re manufactured and dealerships in which they’re sold, cars often undergo long journeys involving many labor-hours and border crossings. None of that comes for free, and you, the buyer, end up paying for it in the form of a destination charge. Here’s what you need to know.
What Is a Destination Charge?
A destination charge is a fee associated with delivering a new car from the factory to its point of sale, which is typically a dealership. Manufacturers levy destination charges in order to recoup the costs that come from preparing the car for transportation at the factory, transporting it from the factory to the dealership, then getting it ready to go on sale at the dealership. Sometimes the words delivery, processing, handling, or freight are used in place of destination, but they all refer to the same thing.
How Much Is a Destination Charge for a New Car?
Destination charges vary between manufacturers, and can even vary between models from the same manufacturer. In general, destination fees range from slightly below $1,000 to about $1,500. It’s sometimes (but not always) the case that larger or more expensive vehicles have higher destination fees. That’s especially true for supercars and other high-end machinery, which can have destination fees in the thousands of dollars. Bentleys we’ve tested have carried a $2,725 destination fee, while the Ferrari 812 GTS we reviewed cost $3,950 to ship from Maranello.
Why Do Destination Charges Cost So Much?
Destination charges can be expensive, but considering the logistics that occur between the factory and the showroom floor can help explain why they cost what they do. We asked BMW about the factors that go into its delivery charge, which has been $995 since the 2015 model year regardless of model or place of manufacture. BMW highlighted these primary factors in how it calculates the fee:
- Transportation by truck, train, and/or ship from the manufacturing facility to a regional vehicle distribution center
- Transportation from the regional vehicle distribution center to a dealership
- Quality checks and repair of any mechanical or cosmetic issues that may have occurred during transportation
- Installation of specific customer-ordered accessories or equipment
These factors entail labor, equipment, and fuel, all of which are captured within the destination fee. They’re indicative of what nearly every vehicle undergoes, regardless of make, model, or manufacturer.
Why Do Dealers Charge a Destination Fee?
Car dealers have a reputation for nickel and diming, but charging destination fees isn’t really part of their profit strategy. Rather, it’s a strategy for minimizing losses, as they initially pay the destination fee to the manufacturer. They pay it to get a car on their lot, so they pass it on to customers—simply recouping an expenditure. As such, it’s uncommon for a dealer to waive or negotiate on a destination fee.
Is Destination Charge Included in MSRP?
Every new car comes with a document spelling out its equipment and options, and how those factor into its manufacturer’s suggested retail price or MSRP. This document, often called the Monroney or window sticker, also lists the destination charge.
How it’s formatted can vary. Sometimes, two prices are listed: One showing the vehicle price alone and the other with the destination fee added. In other cases, there’s one price, with the destination fee summed into the MSRP. Approaches vary between manufacturers, but the destination fee must be included somewhere on the Monroney. MotorTrend always reports prices with the destination charge included.
What If You Pick Up Your Car From the Factory?
Some manufacturers have programs that allow customers to pick up their new vehicles from the factory. However, these are generally intended as fun, enthusiast-oriented experiences rather than a way to avoid paying a destination charge. For example, BMW’s Performance Center delivery program is offered to its customers in the United States. It takes place at the BMW Performance Center in Greer, South Carolina, adjacent to the factory where most of its SUVs are produced. The program includes lodging and meals, as well as driving instruction and personalized vehicle handover. At the conclusion, the owner drives their new BMW home.
Although BMW’s program is no extra cost, it does not negate the delivery charge. That might seem confusing if you’re picking up an X3 that was built within sight of the Performance Center, but makes more sense if it’s a 5 Series that came from Germany. Either way, some amount of transportation, preparation, and quality assurance is part of the process, so BMW levies its standard delivery charge. So even if you have to pay the destination charge when you pick your car up from the factory, you might get some extra perks to go along with it.
Do You Pay Destination Charges on Used Cars?
Given the different paths used cars take to go on sale, it’s unlikely that you’ll see a destination fee on one. After all, it’s common that a customer delivers a car straight to the dealer when they bring it to trade-in on a new car. If a dealer buys a used car at auction, they’ll arrange for transportation to get it back to their lot. Given the variables related to putting a used car on sale, you won’t find destination fees in the conventional sense. It’s more common for a used car seller to factor any expenses such as transportation, repair, or cleaning into their markup on the car. You might not be able to negotiate destination fees on a new car, but if a used car has some, it’s worthwhile to try and talk them down.
Wait, What Is a Destination Charger?
Destination charges and destination chargers have nothing in common. The former is a fee associated with delivering a vehicle to a dealer lot; the latter has to do with recharging an electric car. “Destination charger” is a term coined by Tesla to describe a Supercharger or recharging station that’s situated somewhere that’s fun, offers amenities, or is otherwise worth visiting aside from simply juicing up the battery. Whereas some Tesla Superchargers are placed in locations chosen purely for convenience, destination chargers offer things to do nearby. Examples of destination chargers include hotels, restaurants, and shopping areas. The destination where these chargers are placed provides things to do while the battery is charging besides just playing games or watching movies on your Tesla’s infotainment system.
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