General Motors Faces Class-Action Lawsuit Over Destination Charges


General Motors Sued Over Destination Charges

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The only people who are going to get rich off the latest lawsuit filed against General Motors will likely be the lawyers handling the case.

But here goes anyway.

In a suit filed in the Southern District of California, plaintiffs allege that GM is misleading customers when it adds destination charges to the price of its vehicles, and that the charges are actually profit centers for the automaker and don’t reflect the actual cost of delivery.

Now that you mention it, we’ve always believed that Chevy shouldn’t add a destination charge to the price of a new Corvette when a customer picks it up at the National Corvette Museum – which is within spitting distance of the assembly plant in Bowling Green. It seems to us that museum customers are being forced to subsidize the cost of delivery for the thousands of other Corvette buyers who choose to take delivery at their local dealer. Is that fair?

A little research on Stingray Forums found this possible explanation from 2013 for the “one-size-fits-all” delivery fee:

If you do NCM Museum Delivery, you pay both (destination charge and museum pickup fee) because of a Federal law, passed in the late 1970’s, enacted at the lobbying of car dealers association. Reason they pushed for it, is that they did not want other dealers, located closer to car manufacturing plants, to have a competitive advantage due to lesser delivery charges by some dealers being closer to the plant. It is now the same transporter or rail car delivery fee nationwide. So, since the cars go on transporters 1/3 of a mile to the National Corvette Museum, you pay as much as dealers located in the state of Washington for the transporter delivery fee. The NCM Museum Delivery fee is for a special experience. Please see these four threads as to why many, including me, will happily pay extra for the NCM delivery experience.

According to the plaintiffs in this latest lawsuit, though, GM makes a profit off the destination charges and “deceives customers into paying far more than the actual cost of vehicle delivery.”

TrueCar says that destination fees range from $995 to $1,700 and vary from model to model. They pointed out that the base Cadillac CT4 has an $1,195 destination charge, while the fee for a more expensive CT4-V Blackwing is $200 cheaper. Seems like that should be just the opposite.

This suit seems to be just a case of letting the “principle of the matter” take over. For example, one California plaintiff paid an $1,195 destination charge on his 2021 Chevy Equinox, and a New Jersey man paid $995 on a 2019 Cadillac Escalade. Is that really enough to go to court over?

Car Complaints has this quote from the suit:

“[A] 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. 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.”

Obviously, automakers across the board don’t want to include the destination charge in their base MSRP because of competitive reasons. Will this suit have any impact on that decision? Who knows? Stay tuned for more details as this case winds its way through the legal system, making lots of money for the lawyers handling the debate.

CarComplaints via

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  1. Been in the Auto Logistics biz for over 30 yrs, I doubt they are making any profit on the avg cost. That fee covers every cost incurred from the moment the vehicle departs the back door of the plant until it is dropped at the dealership. Handling, storage, rail loading, rail unloading, truck loading/unloading, overhead for every facility.

  2. Destination fees are one of the older examples of the myriad of “unbundled fees” charged by today’s manufacturers and merchants. While annoying, some are at least ethically acceptable when they represent an additional service that is not inherent, necessary, and unavoidable in providing the primary product or service to a consumer. An example is airline checked bag fees, as you can still travel without checking a bag. However, it should be unlawful to unbundle a fee for something that is inherent, necessary, and unavoidable in the course of bringing a particular product or service to market. Examples are oil disposal fees, hotel resort fees, shipping and handling charges from companies that have no brick-and-mortar presence, and yes, destination fees for automobiles. These are simply the cost of doing the business of providing that product or service to the public and should be required by law to be priced-in.

  3. Standardized destination fees are just plain irritating. I ordered a 2004 C5 convertible new but refused to pay destination twice in the event I should get Museum Delivery. Besides that, I know my luck. It would have rained on me all the way home from Bowling Green to my hometown in NC.

    I was already raped by the dealer with their $599 doc fee.

    Now, doc fees are really a load of crap!!!

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