April 10, 2017
Why Do You Pay a Destination Charge for Your New Car?
Part of your job as a buyer of a new car is to somehow get its price to as low as possible. It’s not easy, especially when you discover a whole new slew of fees that are added to the MSRP. You may try to negotiate some of these fees, but the innocuous-sounding “destination charge” is set and unavoidable. So what the heck is it?
Actually, this fee covers the manufacturer’s expenses in transporting the car from the factory to the dealership you’re in. Here are the steps involved that affects the price:
From Factory to Port
Once a car is finished in the factory, the manufacturer sends it to a port for shipping to your country. This journey from the factory to the port often involves a train, although in some cases a truck may be used.
The typical “autorack” train car is designed to fit in up to 10 cars, but the newer ones may hold up to 20 cars at one time. A single train may have up to 70 rail cars in its line, and that’s good enough to transport up to 800 vehicles at once.
Transporting vehicles by train is a traditional part of the process, and in fact it has always been part of the assembly line. In the old days it was a rather painstaking and undoubtedly frustrating procedure, since workers had to manually fit in 4 vehicles in a single box car.
That changed to the open-air autorack design in the 1960s, although that design went back to enclosed design to prevent vandalism or weather damage. In the 1970s, GM came up with an innovative transport system that allowed them to stack vehicles up vertically, so they were able to fit in 30 cars in a single rail car.
Still, this step hasn’t really changed much. When a car is completed in the factory, it’s sent to the nearby port right away.
Transport by Ship
From the port, the car is then sent to other ports around the world. The port origin may be Bremerhaven in Germany or Yokohama in Japan, and the car can be sent halfway around the globe to New Jersey or New York in the US. For this stage, you need a ship.
These current cargo ships are gargantuan. They can go to as long as 240 yards, and that’s twice the length of a football field even with the end zones. They can also go up to 14 decks high. A single cargo ship designed for cars can ferry as many as 8,500 vehicles at the same time. They’re packed in tight and then secured for the journey, which can take a week or even a month.
Once they’ve arrived in their destination port, workers unload them into these huge tracts of parking lots. Then inspectors come in to check out the cars closely, to confirm that they survived the long sea journey unscathed. Then the accessories are installed on the cars, and the cars are then loaded on trucks.
From Port to Dealerships
You may have seen these trucks on the road, when they ferry a whole bunch of cars. There can be as many as 10 cars on a single truck, so every inch counts. Sometimes they may even put a car dangling over the hood that the truck driver can hardly see anything from the windshield.
Loading a car carrier is an exercise in meticulous precision, so that every inch is used while no damage comes to any of the cars. The trailer on the truck features ramps powered by hydraulics, and cars are usually hauled up to the top level first. Then the ramps are tilted to load the bottom level. Chains are used to tie down the cars securely, and they make sure that the ramps on the trailer don’t hit any of the car roofs.
It takes skill to do this, and of course a huge truck is mandatory. So it’s not surprising that operating a car carrier can pay quite a bit of money. Of course, since you’re the car buyer those fees come from your bank account.
You can’t really argue against the destination charge that includes the fees for rail transport, shipping, and car carrier services. The manufacturer has the law on their side. For the last 3 decades, the law has stated that the destination charge is mandatory and you can’t have it removed.
You can’t even negotiate it down. The law also says that manufacturer’s must tack on the same destination fee for every unit if each model. It doesn’t matter if you live on the other side of the globe from the factory, or you live right on the same block.
Of course, you can always negotiate and get the sticker price down. But the destination charge is unavoidable and firmly set. You have to pay that amount no matter what.