General Motors destination and freight charges (DFC) have increased by more than 20 percent since 2017, according to an analysis performed by Automotive News.
The publication found that the average DFC for a GM vehicle at the moment is about $1,242, which represents a 21 percent increase from 2017. Part of the reason behind the increase may be the rising popularity of larger vehicles versus smaller passenger cars and hatchbacks. A GM spokesperson told AN that “model mix comes into play as the larger the vehicle you ship, the higher the expense.”
“We reevaluate these charges periodically in order to make sure they are competitive and fair,” the spokesperson explained.
However, the increase cannot be solely attributed to GM selling more full-size trucks and SUVs. According to AN, the DFCs for the Chevy Trax and Buick Encore subcompact crossovers rose to $1,195 for the 2022 model year, up from $995 in 2021. The Trax and Encore are both produced at the GM Bupyeong Complex in Incheon, South Korea.
A class-action lawsuit was filed against GM this year over claims the automaker’s vehicle shipping charges are misleading and/or deceptive. The lawsuit, which was filed in California, claims the automaker makes a “significant amount of profit” off of DFCs and “deceives customers into paying far more than the actual cost of vehicle delivery.” The plaintiffs also claim the DFCs have little to do with how much it actually 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.
An article published by Consumer Reports earlier this year also attempted to shine a light on these rising DFCs. CR found that destination fees had risen from an average of $839 in 2011 to $1,244 in 2020, which is more than 2.5 times the rate of inflation. David Friedman, CR’s vice president of advocacy, said the auto industry’s “relative silence on the rise of destination charges is a bit deafening,” and called on automakers to be more transparent with regard to their delivery costs.
“If they had a valid reason beyond just driving up the price, they would actually be able to point us toward specific examples of costs that have gone up within the shipping process,” Friedman said.
Similar class-action lawsuits have also been filed against Ford and Stellantis this year. Like the GM filing, these lawsuits claim the automakers apply misleading DFCs to their vehicles as a way to sneak hidden markups into vehicle transactions.
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Comments
Here in Canada, destination charges are way too high! For a Spark, in 2016 it was more than 1500$ CAD
Freight rates are thru the roof. The real question is will they reduce the DFC if rates come back to earth.
It is just another hidden profit center.
When this lawsuit is settled Monroney stickers will state”destination charges do not reflect the actual average cost to deliver this vehicle from the assembly plant or port of entry”
I always found it amusing that the delivery cost of a Terrain produced at the Cami plant in Ingersoll years ago cost nearly twice as much to deliver across the street to a Ingersoll dealer
as it did to one in Huston Texas even with exchange rates !
It is a profit center!