Dear Car Companies: Enough With the Separate Freight Fee

You don’t need to be an expert in the minutiae of market volatility to understand that plenty of factors impact the price we pay for consumable and durable goods alike.

Forget supply and demand – it’s transportation in particular that plays perhaps the most defining role. It’s the reason why a loaf of bread might cost $1 more in Whitehorse than it does in Southwestern Ontario. The physical act of shipping stuff across the country accounts for a healthy portion of the prices retailers charge, and it’s only bound to increase alongside fuel prices and insurance costs, among others. It’s the kind of markup that makes good economic sense; otherwise, we’d have no stuff to buy to begin with.

Just about all the goods we purchase – from bread to bicycles and everything in between – include the cost to get it to the store down the street in the pre-tax price. There’s a glaring exception to that rule, however, and it’s one that can be downright eye-watering when it’s time to sign on the dotted line. That’s right: the dreaded destination fee automakers charge on top of the sticker price of just about every new vehicle on the market, and it’s time to put the practice to rest permanently.

Just so we’re clear, I’m certainly not suggesting car companies should absorb the cost associated with shipping their vehicles. But there’s simply no reason such a hefty and non-negotiable fee – usually anywhere from $1,595 to $2,480, depending on the make and model – shouldn’t be included in the manufacturer’s suggested retail price (MSRP). Otherwise, there’s always going to be that roughly $2,000 surprise lurking in the shadows.

The glass-half-full outlook is that it’s transparent; you can see exactly how much you’re being charged to get that shiny new car, truck, or SUV from the plant or port it came from to the dealer. But then there’s no reason that can’t be done even with the charge included in the sticker price. The reality is that it’s simply not a good look, and it comes across as a disingenuous way to keep the advertised price substantially lower than what you actually have to pay.

A more cynical person might even say it just affords automakers the flexibility to eke even more money out of you from one year to the next. After all, a brand that increases its freight charge by a humble $25 and sells, say, 50,000 vehicles a year can easily haul in an extra $1.25 million before tax.

Hyundai is on the right track towards bucking the trend with its premium brand, Genesis. Not only are its prices nice and round – $85,000 for the most expensive GV80, for example – but they include that vaunted freight charge. That means aside from tax and environmental fees, what you see is what you pay. Then there’s the outstanding Hyundai Palisade, which is priced at $54,699 for its top trim, but that’s before a healthy $1,925 delivery charge in addition to those same incremental charges and tax.

And none of this is to pick on Hyundai in particular. Just about every other brand charges freight as a separate line item. Some do it as an average of the cost to ship a vehicle anywhere in the country, while for others it varies from province to province. Either way, it’s a cheap trick that can cost you thousands of dollars, and it’s time for automakers to put it to an end.