A class-action lawsuit that was filed against General Motors earlier this year over its destination and freight charges has been dismissed by a U.S. District Court judge, according to Car Complaints.
The lawsuit, which was filed against GM this summer, accused GM of using the shipping costs attached to its vehicle prices (otherwise known as destination and freight charges) as a way to sneak “hidden markups” into its prices. The suit also said GM’s destination charges have very little to do with how much it costs to ship a vehicle from the assembly plant and thus help it make a “significant amount of profit.”
GM argued that its practice of applying a destination and freight charge to its vehicle transactions is not deceptive, as the amount is clearly disclosed to the customer prior to purchase. It also said it has no duty to disclose additional information about the destination and freight charges and whether or not it is making a profit off that part of the transaction. The judge overseeing the case William Q. Hayes, agreed with GM’s argument, saying the term “Destination Charge,” doesn’t necessarily mean the automaker isn’t making money off of it.
“Reasonable or average consumers would not be surprised to learn that the price of goods often includes profit for the seller,” the Judge said, as quoted by Car Complaints. “The term ‘Destination Charge’ does not reasonably imply an absence of profit.”
While GM’s practice of potentially profiting off of shipping charges is not illegal, rising vehicle shipping costs have been flagged as an emerging trend by the marketplace watchdogs at Consumer Reports. A previous report from CR indicated vehicle shipping costs have risen from an average of $839 in 2011 to $1,244 in 2020 – more than 2.5 times the rate of inflation between those years.
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 vehicle shipping charges.
“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 previously.
General Motors’ U.S. 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. These shipping costs are pretty much universal nationwide and do not change based on the distance the vehicle had to travel to arrive at the dealership.
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Comments
So why is it that a Cadillac XT4, XT5 or XT6 only is charged $995 for Destination in the USA, but in Canada these same models are charged $2,200! I know there is a difference between the currency, however, for the cost to be more than double is insane!
boarder crossing, customs, storage lots.
Car prices in different countries can get weird. If I’m not mistaken, Canada gets a much better deal on the Honda Civic than the US, but the US gets a much better deal on other vehicles. It probably depends on where the product is made and how far it gets shipped.
Who ever heard of a car manufacturer soaking buyers for extra profit?
Say it isn’t so!
Don’t like the price or added charges? Then don’t buy it. Anyone who has ever watch Shark Tank or worked in retail where you can see cost and selling price would recognize that the average consumer would be shocked at the amount of markup on just about EVERYTHING you purchase….Stop crucifying the Auto manufacturers for something done by just about everyone including WHERE you buy items, such as department stores…
You do understand this website is called gm authority right? That means people aren’t going to be talking about all those other businesses because this is about vehicles. I know it’s hard to comprehend so I hope you understand now.
“paul r”
This is a GM site; how about staying on-topic, moron.
Well we paid to bail out GM, so….
So if one buys something on eBay and the Seller states upfront that they are charging $20 for shipping and it actually costs $10, should one ask for a refund? Asking for a friend…
Wait, pretty soon they’re adding baggage fees.
At one time the shipping charge was never put on the sales contract. When I bought my 1973 Charger, it might have been $150 on the sticker, but the negotiated price and contract was before shipping chargers and never discussed or added. I assumed the dealer absorbed it. Nowadays, anything that can be added, including all the dealer fluff (paint sealant and other nonsense) it’s a battleground. You wonder why Tesla is doing pretty good, no nonsense pricing. I bought a 1992 Saturn, GM promoted it as a no hassle pricing. It was still the same at the dealer, dodging all the add on fluff.
I can see, down the road, where GM and other manufacturers eliminate the dealership new car sales people as you simply order your new vehicle online then have it delivered to your nearest dealership to pick up. There would be a “Buy it Now” price and any incentives would be already applied. NO haggling with the price … NO stress knowing someone else may’ve gotten a better deal. Make it simple and everyone will be happy!
Is that 10 C8’s on the car carrier? Oh my!
Judge should have dismissed it AND sanctioned the lawyers filing the suit with court costs x 10 and GM legal costs. This is a huge problem in the US with these absolutely stupid lawsuits hoping for a big payday. Small firms get extorted into paying as they can’t afford the legal cost to defend themselves. See the Righthaven suit for how bad it has to get to get sanctioned, and even then I think the law firm only got a 5K sanction. They should have been imprisoned.
The judge should of made criminal chargers against gm when they killed over 12 people for there ignition switch which by the way they knew about for over a decade but here we are. #stopshillingforbigcorporatetheydontcareaboutyou
I’m sick and tired of these frivolous class action “cry baby” lawsuits against the automakers. Always blaming them for something that the consumer doesn’t like. I love it everytime a case is dismissed. If you don’t like it…don’t buy it. GM is allowed to make a profit. I think its called “capitalism”. Hail to the automakers!
People are allowed to file lawsuits you don’t like it leave go to Russia.
I think in the last month I’ve had 3 different emails about class action law suits that I may qualify for. Another reason companies are flocking to China.
Why would you be sick and tired of lawsuits that don’t have anything to do with you? Do you own gm?
I’m sick and tired of people complaining about things that have nothing to do with them.
I remember at some point (1970’s?) that the automakers standardized destination charges to all locations, instead of by distance or zone.
Found window sticker for a 1981 Impala that my dad bought new. Destination charge $385. That is $1082 in today’s dollars. The distance from the plant (Janesville) to the dealer (north of Milwaukee) was 91 miles.
I am waiting on a 2022 Trailblazer. Being manufactured in South Korea, 6500 miles away by air. Not sure how it travels – ship to port in USA, maybe rail to Milwaukee, and then auto carrier to the dealer. Shipping charge is $1195. So, at least 6,400 miles further travel distance, and $113 more shipping cost.
The charge is allegedly to be based on average cost from the assembly plant or port of entry to the U.S.
Have to agree with the judge on this one. They tell you right on the window sticker how much they are dinging you for “destination charges”. If you don’t like it you can go buy something else. Obviously if you live 5 miles from the plant it costs less to ship the car than if you live 1500 miles from the plant, or 10,000 miles from the plant. How much does it cost to ship a boatload of Buicks from China(long live Flint, Mi, may it rest in peace). They are spreading that cost over every car they sell.
Had a friend from Nebraska ask me one time if it was true that you could pick the car up at the factory in Pontiac, Mi and thus save the shipping charges. I had to tell him no. That discount only applied to the parts the General Foreman was pirating out the back door of Plant 8 and selling at a local repair shop. In GTO days. I have to chuckle to myself every time I hear Johnny
Cash sing “One Piece At A Time”.
I doubt if any line employees in China pilfer parts. There is probably a camera on every workstation and thieves either have their hand cut off or get an expense paid trip to Outer Mongolia, never to be heard from again. No, the thievery there happens farther up the food chain. How many Communist Party palms have to be greased to build your product in China? We will never know. I patiently await the day when President Xi Jinping simply declares that Buick now belongs to the “Chinese People”. I wonder if they already require companies to fork over their technical data. I apologize for getting so far off the topic. Wait, what the heck was the topic anyway?
Coming soon: Vehicle cost $0. Non-negotiable Destination Charge $36,999.
Just say “free shipping” like they do on ebay. The total cost is the sale price. The car costs a grand more but it’s free shipping. Sounds great!
Would be interesting to know the destination charge for a Tahoe sold in Ft. Worth.
$1695 in Fort Worth, Texas. Also $1695 in Wisconsin, Illinois, New York City, Seattle, Los Angeles, etc. That is standard charge regardless of dealer location. Do “Search Chevy Dealership Inventory” – they have site where you can view prices with whatever parameters you choose. You can also select options, colors, packages, etc. and link to the Window Stickers.
I hope these 2 bozos that brought the suit paid out the ying yang for attorneys fees…….California resident Robert Romoff, and New Jersey resident Joe Siciliano,
Leave it to CR to get it wrong again.
Every manufacturer does this. Seriously? Don’t like it, don’t buy a brand new vehicle. Buy used!
The judge would be correct in his interpretation however he fails to consider that state governments have written into law that a consumer shall only purchase and retrieve a vehicle from a retailer. Therefore the consumer has no choice in paying the fee or not. This is simply a goverment created monopoly. Why else would companies such as GM not allow consumers who have signed purchase contracts to come retrieve their own special ordered vehicles and therefore help to eliminate the shipping backlog? My father lives an hour from the HD truck plant in Flint MI, and the truck that he ordered in October has been assembled and ready for shipping since the first week of December 2021. Meanwhile the truck sits, rotting away in a field awaiting a carrier so GM can charge nearly $2,000 to ship it.