What is target commission and why you should pay it when you buy a new car
The destination fee is the cost that a new car buyer pays to deliver the car. Currently, the cost of this board has increased dramatically, although not transparently, as some models have different rates.
Unfortunately, the price you see is not the price you pay when buying a new car. Once you accept MSRP (Manufacturer's Suggested Retail Price), or maybe you are trading at a lower price, andthere is a terrible charge of fate. This fee usually adds at least $1,000 to the price of your shiny new car these days. But what about this board?
Why the toll rate at destinations is increased
Consumer Reports recently examined the rise in destination fees and found that hincreased from an average of $839 in 2011 to $1,244 in 2020., which is 48% more than in a decade. During the same period, the price of the average new car increased by only 27%. It would be nice to consider the same as Consumer Reports and ask that destination fees be included in the MSRP rather than a footnote.
Even if it were built into the MSRP, there would still be one more issue: the distance to the buyer's destination. Yes, cars are big, heavy things that need to travel thousands of miles to reach customers, except when they don't.
How many people in suburban Detroit live within miles of a Ford plant in Wayne, Michigan, but pay the same $1,195 fee for a new plant as they do in San Francisco? The same could be asked of new Hyundai Sonata buyers in Alabama who paid $1,005 to have the car built in Montgomery, Alabama delivered.
Profit center for automakers
Destination fees are probably a good source of profit for automakers, but it's impossible to say definitively because there's little transparency about what they mean or why they differ radically between makes and models.. But it's true that dealer shipping and preparation is as important a part of bringing a car to market as crash testing, and should be included in the MSRP just the same.
In the video below, you'll find out why destination fees are still in effect, as they have been for generations, and what stands in the way of any automaker that breaks this costly tradition.
********
-
-
