General Motors Hit With Class Action Lawsuit Over Destination Charges
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A class-action lawsuit has been filed against General Motors by disgruntled customers who claim the automaker’s destination charges are misleading and deceptive.
The lawsuit, filed in the Southern District of California, involves two plaintiffs who allege they were not aware that GM made a profit off of the destination fees it charges customers. According to Car Complaints, the plaintiffs are California resident Robert Romoff, who recently purchased a new 2021 Chevrolet Equinox with a $1,195 destination charge, and New Jersey resident Joe Siciliano, who purchased a new 2019 Cadillac Escalade with a $995 destination charge.
The suit claims General Motors makes a “significant amount of profit” off of the destination charges that it applies to its new vehicles and “deceives customers into paying far more than the actual cost of vehicle delivery.” The plaintiffs also say that a destination charge has very little to do with how much it costs to ship a vehicle from the assembly plant to a dealership and is instead a way for GM to sneak “hidden markups” into its vehicle transactions.
“Destination fee is generally understood in the automotive industry to reflect the manufacturer’s average cost of delivering one of its vehicles to a dealership,” the filing says, as quoted by Car Complaints. “That destination fee is charged to the dealer and passed on to the purchaser or lessee of that vehicle. Consumers similarly have the expectation that they are covering an automotive manufacturer’s cost for the delivery of the manufacturer’s vehicles when paying the ‘destination fee’ as part of their new-vehicle lease or purchase.”
General Motors destination charges usually range from $995 for smaller vehicles like the Chevy Spark and Chevy Malibu to $1,695 for larger vehicles like the Chevy Silverado HD.
An article published by Consumer Reports earlier this year attempted to shine a light on rising destination freight charges in the automotive industry. The report indicated that destination fees had risen from an average of $839 in 2011 to $1,244 in 2020 – more than 2.5 times the rate of inflation. David Friedman, CR’s vice president of advocacy, said the auto industry’s “relative silence on the rise of destination charges is a bit deafening,” and called on automakers to be more transparent with regard to delivery costs.
“If they had a valid reason beyond just driving up the price, they would actually be able to point us toward specific examples of costs that have gone up within the shipping process,” Friedman said.
An independent consultant that spoke to CR for its story, Dan Bedore, claimed destination charges are indeed a way for automakers to increase profitability.
“[Destination] ends up being another lever the business can pull to increase revenue,” Bedore explained. “It does not take a mathematician to understand the value of a $100 increase to a company that sells 2 million units a year.”
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In Canada, destination charges for a Chevrolet range from $1,800 to $2,000 and for a Cadillac it’s $2,200 for all models. So it varies from 2 to 10% of the value of the vehicle. It’s certain that this does not reflect the real costs of transport and that it’s an additional profit center for manufacturers.
Paid about $800 for a destination charge in 2011 to buy a Chevy Cruze that was at the nearest dealership to Lordstown, the plant it was built in.
In theory that $800 is supposed to be an average to deliver to any dealer,anywhere but now it is inflated for extra profit.
I guess black bowties will be next. They can place a black bowtie in the vehicle but they won’t install it. The standard bowtie is yellow and the black bowtie is an option. They double dip you on the price by placing it in the vehicle and giving no credit for the yellow one.
They destroy the gold and install the black
Was charged $1,095 for GM to NOT deliver my new Corvette. I paid $995 to pick up my new Corvette at the museum, 1/4 mile from the factory.
Next up a disclaimer on the window sticker ”destination charge does not have any correlation with the actual average price of transporting this vehicle from the factory or port of entry to your dealer”.
Anyone that ships product charges a little more than actual cost to ship. It not like the product ships itself. People complain about this but don’t complain about baggage fees that airlines make a killing on. Also the fee is the average for all dealers for a car. It doesn’t matter if its 500 miles to dealership or 1 mile the price is the same. If it wasn’t then dealers near the factory would be selling more cars because of the lower transportation cost.
why is the charge different between different models? Why is a caddy more to ship than a silverado? When they both are on the same hauler?? Hmmmm
Well I know back in the day they never did charge the buyer for the color of the vehicle it was in with the car you could buy two cars with the same thing in each car and being different colors and the price would be the same now if you wanted air conditioner or power windows and seat’s that was extra but they never charged for the color like they do now which is a big rip off for the consumers
In there defense the price of different color paints can vary widely,some just spread it across all vehicles or a color or two are extra or some like GMC charge extra except for plain white or plain black
The costs of shipping that has inherently gone up, outside of inflation, is the cost of fuel.
Different models are priced different based on overall size and GVW as they take up more overall space on the trailer or train box.
And yes everything is always marked up, there are other costs associated with shipping, like porters in the yards, the plastic wrap that protects the pain until it reaches a dealer (mostly on the more expensive cars hence a higher destination charge)
I’m not saying, however, that destination charges aren’t “hustle” as I don’t pay destination charges for my corn flakes to show up to the grocery store. But I digress it a cost of purchase that I willingly incured.
They will probably claim it is because they charge by the pound.
None of this really matters, as customers can choose BEFORE they purchase as to whether destination charges, or accessory charges, or whatever, make sense. Additionally, GM is no different from the other OEM’s in how they price destination/accessories/etc, so my guess is that the attorney’s involved are simply chasing pipedreams.
You’re wrong. Consumers have no choice in regards to destination charges. It’s on the invoice. I spent 40 years in the business, I know. If, you buy a new vehicle. You will pay destination charges. The only choice is to buy or not buy.
Thank you for confirming my comment! As I mentioned, customers can choose BEFORE they purchase as to whether the destination charges make sense, and as you mentioned so eloquently, the ‘only choice is to buy or not to buy,’ which is the timeframe BEFORE they purchase. I think we don’t give customers enough credit as to their willingness to be suckered away from the true ‘net’ value of their purchase, which is agreed upon price (including destination), less available rebates…
On the issue of actual destination costs, yes every manufacturer averages their shipping costs across their actual destinations, so as to eliminate unique shipping costs for every dealer, for every unique body style, etc. If an actual ‘specific vehicle to specific location’ approach were to be deployed, then for Chevy alone, there would be 1,5 million unique destination charges (500 diff body styles * 3000 Chevy dealers)
On a final note, I’ve shipped a few vehicles across the US for personal reasons, and in most cases, its way north of a $1000. Bottom line is that GM is not really different from the other OEM’s, and this class action suit is like most…attorney’s looking for those gullible enough.
Glad to see someone else who’s been in the business a long time…
Cry babbies. What happened to if you don’t like the charges you go down the road and buy from someone else. You go over the sale conditions prior to you signing your name. Sorry individuals with no common sense lead on by ruthless lawyers who would sell their own mothers down the road for an extra buck. Ain’t America great?
Would make a great selling point by a manufacturer. “We do not charge a shipping fee”.
It’s all lawyers, cry babies, idiots … and semantics.
When I buy a car, I have one concern: the “out the door” price.
It doesn’t matter what the dealer or the manufacturer calls the various components of that price.
Would these clowns feel better if the dealers pulled the same stunt that advertisers on TV do?
“FREE!!! Brand new 2022 Cadillac!!! (Customer responsible for S&H charges only). BUT WAIT!!! THERE’S MORE!!! First 100 callers get a SECOND 2022 CADILLAC FOR FREE!!! (just pay separate S&H charges).”
If the Cadillacs are “free,” you can guess that the S&H charges are gonna be somewhere north of $100,000. And you have to take that second Caddy.
I know what I want. I know what I am willing to pay for it.
I don’t care what the dealer paid the manufacturer. I don’t care about the hold back or the dealer incentive or the dealer’s electric light bill.
He has to cover all his costs, make a profit, and feed his family.
I have to cover my expenses, and feed my family.
If the dealer and I can agree on a price that satisfies the needs of us both, we’ve got a deal.
Case closed.
Old Bryan,
Former salesman, sales manager, minority partner, and sole proprietor.
That is all fine then just be transparent and ”include” it in the base msrp since all vehicles have the same charge if it needs to be transported 2 miles or 2000 miles.
Pick up a Corvette for Museum delivery like I did in 2008, from the plant across the street, and pay $895. Now that was pure profit.
And that was your choice. Just like lottery tickets are a voluntary tax.
How do you sign up for the class action law suit
Shipping the car is like
shipping any other product. As the seller, you can choose to charge the actual cost, a set cost, or even ship for free. The constant adjustment of rebates on vehicles I’m sure takes the actual cost of shipping a vehicle into account.
Destination charges should be included in the price, not a additional fee. Dealerships tend to slip that in after the negotiation. Do you see a Destination fee for a appliance or other items you buy at a store? Dealers should have a set price instead of going through the haggling process. Tesla revolutionized the buying process and it is a much better experience.
They are on the window sticker,the issue is the oems overcharge for extra profit and are not based on reality.
Actually, dealerships do not charge a destination fee normally. It’s billed to them and on the window sticker set by the manufacturer.
Profit on shipping is not a new concept. A company I worked for marked up standard shipping rates, and made an extra 100-200K per year profit on shipping. If businesses sold everything at cost they would go out of business. The company I worked for tried that as well (low margin, high volume) and almost went out of business.
Try shipping a car with a reputable transport company and see what it will cost you. Odds are it will be on par with the delivery charge GM adds to their vehicles.
This lawsuit is absurd. If you don’t like the delivery charges, don’t buy a GM vehicle. Compare the delivery charges at GM with the other automakers. They aren’t drastically different. Things cost money. Prices are rising for most goods and services. That’s just how it goes.
Might as well sue all of the dealers charging $300-$600 “documentation fees”. That is pure profit too for something that should be covered by the profit they make on the sale. Oh wait, buyers don’t want dealers to make any profit either.
If a customer of mine wants a receipt I am going to start charging them a $
Considering dealers are NOTORIOUS for ripping customers off by overselling features on a car, scaring customers into repairing things on a car that don’t need repaired and so on they don’t deserve that profit.
While I despise Tesla the one thing I am grateful for is their push to stick it to corrupt dealerships.
Dealers already got sued about doc fees, and that’s why nearly every state has laws on how they are advertised and disclosed, if not limited.
Anyone can hire a transport trucker to take their vehicle across country for about $600. It’s done everyday and in large volumes. We have sold vehicles to folks 3,000 miles away and the charge has been about $600 to $900 but not over.
So maybe GM is attempting to cover their administrative fee’s for management of the group who deal with transportation vs. cover that administration in the retail price of the vehicle.
The company’s that have the contracts are teamsters,probably in the uaw agreement so if they get into a tif with the oems no vehicles will be delivered.
Tesla is charging $1125 to $2250, plus a documentation fee in addition to their advertised prices…
Doc fees are almost always regulated by state law, so they have an out on that.
Actually, only some states such as California limit the maximum amount a dealer can charge for doc fees, but most states have no cap on doc fees. The state of California can charge no more than $85 for doc fees when you purchase/lease a car; however, Florida dealerships, (with no legal limit) generally charge between $600-800 for doc fees… and it is made crystal clear that this fee is nonnegotiable if the customer balks. Outrageous!
No. I’m not talking about a limit. Nearly all states, including mine, specify how the doc fee is disclosed and advertised. By complying with such laws, they generally can avoid getting sued because that’s how the government told them to do it.
not in my state,most of the rip-off dealers are at $399 and the sad thing about it back in the day they charged $0 they copied IL.which now caps those at $160
I’m in the transportation industry (car hauler) I’ve seen the prices for destination charges go up,yet the manufacturer’s continue to pay us less each year,the prices we are getting is 35-40% less than we were making around 2010-2012 yet the price of fuel and insurance continues to skyrocket.
Nail them bastards for their deceitful charges!
Nothing deceitful about it. It’s on the window sticker. It’s your choice. Buy the vehicle or leave.
I say everybody buying a new car to stop when they get to that point and walk out.
Waste there time not yours.
Tell them as you walk out to talk to there manager about losing the purchases.
A good portion of you play tough like they do and this charge would go away.
They pay it and you will pay it. They will let you walk on destination charges. In this market, consider yourself lucky to get anything off of the sticker. Most dealers are starting to add market adjustments to the window sticker. Thanks to the microchip shortage and yes people are paying it or they leave.
Definitely don’t ever buy from a dealer named AutoNation Chevrolet north.
They found a way to screw me out of 5000 dollars.
They sold me a non working vehicle when I returned it before the 3 days are up and they would not take it back as a return.
So I eventually had to buy something since they had no inventory when I went back.
There also about to get sued for there actions to sell a broken vehicle knowingly just so the only way out of it is to upgrade which cost me 10000 more.
Scumbags and all Autonation dealerships do this to there customers.
You better make sure you love a vehicle,a hours or overnight test drive etc. return it and you will get screwed on a different one.
Um did they not read the prices and contract when they bought the car. These prices are nothing new, and with the way things are wouldn’t suprises me if they go up again. Kinda sounds like they’re just trying to get a quick buck. Hell I think I paid just over 400 for my Motorcycle.
The big three…. tom DICK and harry…. and lots of suckers
Most class action cases are about the buck. The winners in most class action lawsuits are the plaintiff lawyers and the court system. Once all of the legal fees are paid at a 1 to 1 ratio, the class members divide up whats left which individually amounts to very little. Almost worthless amounts.
Hey Amazon, are you reading and listening ??
This is a great , new business model that is right up your alley !!
Sell the vehicle online, pick it up from the plant, drive it directly to the customer, let the owner take it to the Dealer for Service.
Simple, No destination fees and no Dealer PREP cost.
And soon no Dealers !!!! Perfect.
Well I know back in the day they never did charge the buyer for the color of the vehicle it was in with the car you could buy two cars with the same thing in each car and being different colors and the price would be the same now if you wanted air conditioner or power windows and seat’s that was extra but they never charged for the color like they do now which is a big rip off for the consumers
Stay away from pearl colors and you won’t pay extra. They have an extra coat of paint.