Destination charges soar in background of record-high sticker prices

Jeep's biggest-ever SUVs carry a big asterisk: a $2,000 shipping charge tacked onto the bottom of the window sticker for every Wagoneer and Grand Wagoneer.

That unavoidable, nonnegotiable fee is among the highest ever for a new vehicle from a mainstream brand — and more than double the $995 that Jeep charged on its 2016 models.

It's not just a Jeep thing. Shipping fees now add $1,695 to the price of all six full-size light-duty pickup nameplates sold in the U.S.

Across the industry, the average amount charged for transportation from factory to dealership climbed at roughly triple the rate of inflation during the past decade, according to Consumer Reports.

The surge has come as consumers pay record-high transaction prices for new vehicles, yet it's largely invisible because many brands omit shipping fees from advertised prices and bury them in fine print on their websites.

Jeep dealer Steve Wolf said a friend recently noticed the Grand Wagoneer's $2,000 destination charge and griped that it drove up an already-hefty price tag — the Grand Wagoneer starts at $87,845 before shipping. But it didn't stop that person from buying the luxurious SUV.

"Most of the time, they don't even see it really because it's embedded in the invoice," said Wolf, who owns Helfman Dodge-Chrysler-Jeep-Ram-Fiat in Houston. "It adds to the cost of the vehicle, but in my experience, it's very rarely an issue."

However, class-action lawsuits filed this year against General Motors, Ford Motor Co. and Jeep parent Stellantis argue that the companies are unfairly padding their profits with inflated shipping charges.

Automakers don't reveal much about how they set shipping fees, often labeled on stickers as a destination or delivery charge. Consumers shopping on brand websites might notice an asterisk next to the manufacturer's suggested retail price that links to a footnote explaining that shipping costs extra, or they'll discover the fee when using a vehicle configurator.

Consumer Reports argues that automakers should include the shipping charge in their advertised and online prices, as there's no way around paying it.

"It just feels like they're not being transparent," said Mike Monticello, the publication's manager of road tests and reviews, "and it seems so weird that the destination charges are all over the map."

An Edmunds analysis found that the average destination fee rose 12 percent from the 2017 to 2021 model years. And Consumer Reports calculated that destination charges for mainstream automakers jumped from an average of $839 in 2011 to $1,244 in 2020.

Not all brands have followed suit, though. BMW's website shows that the shipping charge for every model the brand sells in the U.S. is still only $995.

Among non-exotic manufacturers, Stellantis and its predecessor, Fiat Chrysler Automobiles, have most aggressively increased shipping fees.

FCA's shipping charges began to jump around 2017, Monticello said. Consumer Reports found that they rose an average of 90 percent for Chrysler, Dodge and Jeep vehicles from 2011 to 2020, 74 percent for Ram trucks over the same period, and 114 percent for Fiat from 2012 — its first full year of U.S. sales — to 2020.

Monticello pointed to the Jeep Cherokee as a prime example. Its shipping charge rose from $995 in 2016 to $1,495 in 2019, a 50 percent increase in just three years on a nameplate that was largely unchanged. Cherokee production moved from Ohio to Illinois in 2017.

Monticello said he was shocked by the $2,000 charge on the Wagoneer and Grand Wagoneer, which are built in Michigan and went on the market this year.

"That's something that you almost could understand for more of like an exotic sports car or something they have to take special care with the way they wrap it," he told Automotive News. "But, you know, it is coming from the company that is pretty much the worst offender of destination charges at the moment."

Stellantis did not directly answer questions about why it has raised shipping charges faster than competitors, responding with a statement saying it sets pricing based on "the total vehicle package."

Ford and GM also have raised shipping fees faster than average in recent years, according to Consumer Reports. Increases for brands including Infiniti, Lexus, Mercedes-Benz and Volvo have closely tracked the rate of inflation.

Tyson Jominy, J.D. Power's vice president of data and analytics, used to work for Nissan in a group that determined shipping charges. He said making additional profit shouldn't be the goal.

"The nuance is automakers aren't supposed to make money on that line item per se; it's not supposed to be a place of hidden profits," Jominy said. "The agreement, at least historically, was you kind of want to get that number as close to breakeven as you can."

Shipping charges are generally the same everywhere in the country and aren't connected to where a vehicle is built, Jominy said, so an Ohioan buying a Jeep Wrangler made in Toledo wouldn't get a break compared with someone on the West Coast.

"You want to have the same number for all consumers because you don't want to be more or less competitive in one region of the country just because your plant's on the other side of the country," Jominy said, calling it a "complicated calculation."

GM said a vehicle's size factors into shipping fees.

A spokesman said the company looks "at all input expenses across each mode of transportation and each vehicle cost is calculated by type," and he added that "it typically costs less to transport smaller vehicles versus larger vehicles."

"Therefore, model mix comes into play as the larger the vehicle you ship, the higher the expense," the spokesman said in a statement. "We reevaluate these charges periodically in order to make sure they are competitive and fair."

GM's average shipping fee, according to Edmunds, has risen 21 percent to $1,242 from the 2017 to 2021 model years. GM's brand websites show that shipping fees for two of its smallest crossovers, the Chevrolet Trax and Buick Encore, rose to $1,195 for the 2022 model year from $995 previously.

Hyundai said its shipping fees cover a variety of logistical and processing costs in the delivery of a vehicle.

"Hyundai monitors these costs and periodically adjusts destination charges to reflect the market conditions," the automaker said in a statement.

American Honda charges shipping fees of $1,015 for cars and $1,225 for light trucks. It said those amounts "are based on the average cost of transporting a vehicle from the production location to the dealer along with allowances for certain variable costs."

Honda said it averages transportation costs for cars and light trucks separately to determine a uniform charge "for all models in those two segments as part of the effort to provide customers a complete picture of pricing information."

Toyota Motor North America has four tiers of shipping fees, ranging from $1,025 for cars to $1,695 for the Tundra full-size pickup. Its website discloses that the company "may make a profit on the Delivery, Processing and Handling Fee."

Bob Carter, Toyota Motor North America head of sales, said the company monitors rival companies when setting its shipping fees.

"We market base price to where the competition is with our [delivery, processing and handling] and, quite frankly, it's reflective of the fuel surcharges that are going out," Carter said.

"You know what's happening with the industry with steel prices, and overall commodity prices are much more significant. But the industry has been ... pretty restrained. Where the margin improvement is for the manufacturer is on the reduction of incentives needed in this market."

J.D. Power's Jominy said rising shipping fees haven't dampened demand for new vehicles — many of which are now being sold at sticker price or higher because of scarce inventory. In fact, he recently ordered a new vehicle for himself.

"I know that the shipping has gone up, and it did not influence me one bit as to what I was doing," Jominy said.

Ivan Drury, Edmunds' senior manager of insights, said people are loading up their vehicles with options and pushing the industry's average transaction prices up to about $45,000. The shipping charge is only one fee among many that can get lost in the fray.

"A new-car purchase is a luxury purchase, no matter what you're buying," Drury said. "The price is just so high that this is just one of many factors."

Hannah Lutz, Larry P. Vellequette and Laurence Iliff contributed to this report.