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Mark Phelan: Buying a new car? Watch out for $2,000 hidden fee in footnotes

Mark Phelan, Detroit Free Press on

Published in Automotive News

How’d this begin?

A federal law requires automakers to reveal the destination charge on the window sticker, which includes other information like standard features, options, government safety ratings, EPA fuel economy and emissions estimates, and the vehicle and its major parts were built.

The window sticker is also called the Monroney, in honor of U.S. Sen. Mike Monroney, an Oklahoma Democrat who sponsored the 1958 Automobile Information Disclosure Act, an early consumer protection law. Frequently updated with new information, the act’s original requirements included listing transportation charges.

Theoretically, the destination charge consists mostly of what it costs to ship the vehicle from its plant — or port of entry, for imports — to the dealer that sells it. There may also be some payment to the dealer for fueling, inspecting and cleaning the vehicle.

Destination charges used to vary around the country, depending on how far the vehicle was shipped.

That gave dealers near the assembly plant an advantage, which they loved. Distant ones didn’t. Happy dealers make happy auto execs, so automakers adopted a national average for shipping costs. It’s the same throughout the U.S., with a few minor exceptions.

 

Automakers and dealers sometimes try to justify destination charges by saying the Monroney Act requires them. That’s incorrect. The act says the transportation charges, “if any,” must be revealed. It does not say they must be assessed.

Would you do this for a toaster?

If this just started to look logical, check yourself: Destination charges do not include shipping costs from overseas plants. Those are wrapped into the vehicle’s MSRP.

Why not do that with the cost of shipping within the U.S., you ask?

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