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If you look at the window sticker of a new car (or a Monroney sticker, if you’re a cool auto journalist), you’ll notice all the standard and optional features of the vehicle and the associated price.
There is also other legally-required information, and then there’s the total. The manufacturer’s suggested retail price (MSRP) includes everything on the Monroney sticker, plus a destination charge.
That destination charge, listed right above the total MSRP, is the shipping and handling or freight fee. It’s there to basically cover the cost of shipping. It’s a fee that’s typically non-negotiable and is used by the OEM to cover the cost of getting the vehicle from the factory to your dealership.
Fun fact: If you pick up a new Chevrolet Corvette in Bowling Green, Kentucky, you have to pay an additional fee for the museum delivery. That makes sense, as it’s a special service. But you still have to pay the shipping charge, which doesn’t make any sense at all since they don’t have to ship it.
Dealerships will charge additional fees — depending on shadiness — to prep the car and put it on the lot for sale, but that’s not what we’re going to talk about today.
To give you an example of a destination charge, Busan, South Korea, is — as the crow flies — 6,784 miles from the center of my town. For my Canadian readers, that’s 10,918 kilometers.
For the Hyundai Ioniq 5 N, which is built in Busan, Hyundai charges a delivery fee of $1,600. That seems pretty reasonable to ship a big, heavy car on a big, heavy boat across the biggest ocean.
To put a Mercedes-Benz CLE 53 on a truck, and then a boat, and then back on either a truck or set of rails from Breman, Germany, to the center of my town (which has a Mercedes-Benz dealership, coincidentally enough) is 3,973 miles (6,395 kilometers), and Mercedes-Benz charges $1,250 for destination.
Nissan, at least for now, sells the sub-compact Versa sedan, which is assembled in Aguascalientes, Mexico. To get it to my town, the destination fee is $1,245. That’s a trip of just 1,733 miles (or 2,789 kilometers).
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Now, it should be said that the destination charge doesn’t vary by location in the United States. You pay the same fee if you live in El Paso, Texas, as you would in Duluth, Minnesota.
But you can probably see where I’m going with this.
I live in the Toledo television market, and the Toledo North Assembly Plant (where Stellantis builds the Jeep Wrangler) is 42.7 miles (68.7 kilometers) away as the crow flies.
The destination charge on a brand new Jeep Wrangler is $1,995. That’s $395 more expensive than a car coming from Korea, which travels by rail, boat, and truck. The Jeep, in the United States, will at most do a truck and rail.
If you want a Ford F-150 built in Dearborn, Michigan (83.4 miles, 134.3 kilometers), that destination charge is a whopping $2,595.
It’s been long suggested that the rise in destination charges has been to help boost the profit margins for the automaker, since it’s a fee that must be paid by the buyer, and it’s easy to inch the price up without many noticing.
💡Do you have information about OEM destination charges? I would love to hear from you. Using a non-work device, you can message me on Signal at chadkirchner.1701, or with another secure communication method.
It would seem that in the tariff age, automakers are using the destination charge to offset having to raise the base MSRP of a vehicle. Some automakers do list the destination charge in the MSRP when they announce pricing to the media, but not all of them. Not all websites report the MSRP with delivery when they talk about vehicle pricing.
That destination charge can make a big difference.
For example, Nissan says that the new Leaf starts at under $30,000 for the S+ model. But when you factor in the destination charge, which you have to pay, of $1,495, the starting price for the S+ is actually $31,485. Now I think that’s a great deal, and that the Leaf is extremely important, but it’s also not “under $30,000” for the S+ trim.
(Just as a side note, that Leaf is assembled in Tochigi, Japan, which is 6,417 miles from my town.)
Some people are praising the One Big Beautiful Bill Act by now having new car buyers be able to deduct the interest they pay on a new car loan (assuming they meet a bunch of, quite honestly, ridiculous qualifications), for “up to $10,000 off.” But the couple of hundred bucks you — someone who would actually qualify — is going to deduct will be offset by an increase in the destination charge.
When buying a new car, make sure you’re paying attention to all of the fees that are being added on, and negotiate on the ones you can. In some states, document fees are capped. When you use friends and family pricing with some automakers, it also caps fees. While you can’t negotiate the destination charge, you can negotiate the final price without as many of the other fees, and find a dealership that will play ball if the first one you go to isn’t interested.
As the upcoming recession gets worse, it’ll be more difficult for dealerships to sell cars. While it’ll also hurt the buyer — they won’t have as much money — it will put the buyer who is capable in a better negotiating position. Unlike during the COVID era, parts shortages aren’t going to be there, allowing dealerships to drive up prices due to lack of inventory.
A logical solution for this would be legislation requiring that the destination charge be factored into the price of a vehicle, and not a separate line item on the Monroney. The customer has to pay the fee, so why shouldn’t it just be baked into the price of the car?