THE SECRET REASON CAR PRICES ARE STILL CLIMBING
If you’ve bought or even shopped for a new car lately you’ve probably noticed something weird: the sticker price might look…okay — but the final number keeps creeping up. A big, quiet reason is the steady, often large increases in destination (or delivery) fees — the line item manufacturers put on your window sticker for getting a car from the factory/port to the dealer. It’s legal, often non-negotiable, and increasingly a meaningful profit lever for automakers and the car industry at large. Here’s what’s happening, who’s doing it, and whether anyone can stop it.
What is the destination fee — and why it matters:
A destination fee (aka freight, delivery, destination & handling) is the charge manufacturers list to cover transporting and preparing a new vehicle for the dealership. It’s shown on the federal Monroney (window) sticker and typically charged to the buyer at point of sale. Unlike a dealer add-on, this fee is set by the manufacturer for each model and applied nationwide. Sources that follow car pricing explain that the charge is meant to cover hauling, prep and handling — but how those dollars are calculated and whether they’re purely cost recovery is often opaque.
How big is the increase — and how much are we talking?
Recent industry tracking shows destination fees have jumped substantially in recent years:
• By some measures the average destination charge rose into the $1,400–$1,600 range for recent model years (Edmunds/industry reporting). That’s a meaningful add to every sale.
• Analysts and trackers note destination fees are rising faster than normal inflation: aggregate increases of roughly 20–25% since around 2017 have been reported for many manufacturers.
Put differently: a fee that used to be several hundred dollars is now regularly $1,000–$2,000 or more on many models — and on some luxury or specialty models it’s even higher. That extra $1k–$2k per vehicle flows into the industry’s revenue picture and raises the typical out-the-door price even when MSRPs look relatively stable.
Who’s doing it? — Manufacturers and examples:
Because destination charges are manufacturer-set, the “offenders” are often the OEMs themselves (although dealers can still tack on other fees on top). Recent lists and reporting show several brands with especially high destination charges:
• Luxury and niche brands have some of the highest listed fees; consumer lists for recent model years name brands/models with destination fees well above $1,500 (and in isolated cases much more).
• Mainstream U.S. pickup and SUV lines have also seen notable increases — e.g., some full-size trucks’ destination fees jumped markedly year-to-year as automakers quietly raised them. Industry coverage highlights increases across big players (GM, Ford, Stellantis–Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Maserati, Opel, Peugeot, Lancia, Vauxhall, and Ram) on flagship trucks.
Bottom line: Destination-fee increases are an industry-wide tactic — every major automaker uses the line item — but the largest absolute fees and fastest recent increases tend to appear at premium on high-demand models and top consumer-marquee brands.
Is the destination fee pure profit?
Not entirely — part of the fee nominally covers legitimate costs (hauling from plant/port to dealers, processing and prep). But several reputable outlets and consumer advocates say there’s a fuzzy boundary: manufacturers’ average shipping and handling costs and there appears to be room for markup inside those fees. In practice, because consumers rarely push back on a mandatory manufacturer charge, it functions like a stealth price increase and boosts OEM revenue and margins.
Where in the U.S. is this happening?
Because destination charges are set by the manufacturer they apply nationally — your neighbor in Ohio pays the same listed destination fee for a given model as a buyer in California (with only a few exceptions for Alaska/Hawaii). That said, dealer markups and market adjustments (separate from destination fees) vary widely by region: high-demand metros and states with tight inventories frequently show bigger dealer add-ons or higher “market adjustments.” So you feel the squeeze more in certain markets (Sun Belt, coastal metros, areas with tight supply), but destination charges themselves are a nationwide phenomenon.
Is the destination fee negotiable?
The short answer: NO.
Because manufacturers set the charge and it’s printed on the window sticker, most buying guides and industry experts say the destination fee is a mandatory, non-negotiable line item. You can (and should) negotiate the overall out-the-door price, dealer doc fees, and other add-ons — but the destination fee itself is rarely removed or discounted. Some exceptions exist (rare promotions, factory delivery programs) but don’t count on skipping it.
Practical buyer tips:
• Always ask for a true “out-the-door” final quote that lists destination and all fees.
• Compare total prices across dealers and states — dealers in lower-markup markets sometimes offer better overall deals even after destination is included.
Can the government crack down on destination fees?
Yes — to a degree — but the options and reach are complicated:
Consumer protection rules on “junk fees” and drip pricing: the FTC and other regulators have been focused on junk fees and deceptive pricing practices. The FTC has pursued rules and guidance aimed at forcing clearer disclosure and preventing deceptive “drip pricing” (not showing the true final price until late in checkout). Some proposed and finalized rules target hidden or deceptive fees in many industries; parallel efforts have been directed at auto sales (the “CARS” initiative). Those moves strengthen regulators’ ability to require transparency and to police deceptive practices.
Limits and practical hurdles: destination fees are currently a disclosed line on the Monroney sticker and are explicitly tied to transportation/prep. Regulators can force clearer disclosure (e.g., require “all-in” pricing) and ban deceptive dealer tactics, but simply outlawing destination fees would be harder — regulators would need to show they are deceptive or unlawful rather than legitimate line-item costs. Legal writ large: regulators can and have targeted “junk fees” and deceptive tactics, and they can push for roll-up (require MSRP to include destination or require ads to show final OTD price). That would curb the stealth effect even if the charge itself remains.
State Attorneys General & FTC enforcement: consumers can (and do) file complaints with state AGs and the FTC. Large numbers of complaints about deceptive pricing or undisclosed mandatory add-ons can trigger investigations or rulemaking. So government action is possible — especially on disclosure and deception — but eliminating manufacturer destination charges outright would require regulatory or legislative changes.
So, is this the real reason prices feel stuck?
It’s a major, frequently overlooked reason. Automakers have a few levers to raise average realized price without changing headline MSRPs too aggressively: higher option content, shifting mix to higher-margin models, dealer market adjustments, and raising manufacturer destination fees. Because the destination fee is visible but rarely negotiated, it’s a simple, low-friction way to push up revenues and the final price buyers pay. That doesn’t mean it’s the only reason for higher prices (supply, tariffs, materials, labor, EV investments, and dealer behavior matter too), but it’s a stealthy one that adds real dollars to every sale.
What you can do as a buyer:
1. Ask for out-the-door pricing before stepping foot on the lot — insist the quote includes destination and all fees.
2. Compare dealers and markets — a dealer in a lower-markup area may still be cheaper even with the same destination fee.
3. Negotiate everything else (selling price, trade, dealer fees, F&I products). Treat destination as a given but push hard on the rest.
4. File complaints with the FTC or your State AG if you believe fees were misrepresented or bundled deceptively (this builds the aggregation of complaints that spurs enforcement).
Final Thoughts:
Destination fees are no longer the modest freight charge many buyers assume. They’ve grown into a sizable, manufacturer-set line item that quietly raises the out-the-door price of new vehicles. Because they’re often non-negotiable and applied nationwide, they function as a stealth price increase that benefits the industry — and regulators are increasingly looking at junk fees and drip pricing to protect consumers. For buyers, the best defense is informed insistence on honest, out-the-door pricing and smart comparison shopping.
Sources & further reading
• Consumer Reports — overview and history of destination fee increases.
• Edmunds / pricing guides — destination fees are typically non-negotiable; check out their buyer guides.
• CareEdge / price trackers — data on percent increases since 2017 and which makes rose most.
• CarBuzz — recent lists identifying automakers with the highest destination fees.
• Reuters, Consumer Affairs, Jalopnik — reporting on recent destination-fee jumps, tariffs, and how OEMs are passing costs to buyers.
• FTC guidance and rules on unfair or deceptive fees and the broader “junk fees” focus (CARS initiative, Unfair/Deceptive Practices Fees Rule).
Read. Learn. Then pull the proverbial trigger!
