What Is a Destination Charge?
The destination fee for a new car is not negotiable.
A Destination Charge Covers the Cost of Transporting the Car
A destination charge is a fee added to the manufacturer's suggested retail price of most new cars sold in the United States, nominally representing the cost of transporting the vehicle from its place of final assembly to the dealership. This reflects that, direct-to-consumer companies such as Tesla and Rivian notwithstanding, most automakers don't sell cars to individuals; they sell them to dealerships.
Every new vehicle in a showroom had to be transported there from the factory, a trip that might involve freight trains, semitractor-trailers, or even an ocean voyage. The dealership pays a destination fee on every new vehicle it receives and then passes that cost to the customer.
In theory, the destination fee is the average cost for the automaker to ship that vehicle to any dealership in the U.S. Some manufacturers charge the same destination fee for every model in their lineup. Other manufacturers will tailor the payment to individual models but make it so the same model carries the same fee no matter what showroom the factory ships it to.
Destination fees don't typically go down, and in some instances they may increase annually. Consumer Reports found the average new-car destination charge rose from $839 in 2011 to $1,244 in 2020. As of publication, GMC charges $2,295 in destination fees for its Hummer EV. Manufacturers aren't required to explain exactly what goes into calculating or adjusting a destination charge.
Destination Charges Can Be Hidden
You might have to do some research to determine a particular model's destination charge. Some automakers and dealerships include the destination fee when advertising a car's price, while others don't.
By law, every new vehicle must display the destination charge on the window sticker. But if you're looking at ads in print, on TV, or online, you might have to dig for the destination charge and do your arithmetic to get the accurate total price of a car. If you're using an online vehicle configurator, the destination fee may appear in your build's summary section just before the total price.
Note that used cars do not incur a destination charge.
Factor in the Destination Charge When Budgeting
Destination charges are, generally speaking, not something dealerships are likely to waive. If you're looking to negotiate vehicle price, it can be a better idea to focus on the full price of a new car, the cost of dealer-installed options, the financing rate, the value of your trade-in, and other variables to make your best deal.