New car sales may be down for July, but prices are running at record level, according to a preliminary analysis by J.D. Power and Associates, an average of more than $33,000, or $1,400 more than what the typical new model cost U.S. buyers a year ago.
But that only tells part of the story, it turns out. It turns out that delivery fees, that figure at the bottom of every new car, truck or crossover’s window sticker, has been going up substantial faster than new vehicle prices.
An analysis conducted by Cars.com found that the delivery fees for the 10 best-selling vehicles of 2013 averaged $899 back in 2013. That has jumped to $1,289 for the 2019 model-year, a 45% increase over a six-year period that saw the average transaction price, or ATP, of new vehicles increase a much more modest 16 percent, according to J.D. Power, and general inflation climb merely 10 percent, according to federal data.
The numbers can be a bit misleading. Delivery prices tend to be higher on some types of vehicles, such as trucks, in part, because fewer of them can fit on a car carrier. And SUVs and light trucks dominate the current U.S. new vehicle market, while smaller sedans and other passenger cars had a much larger presence six years ago.
That said, delivery charges have gone through the roof on trucks. Currently, someone purchasing a Chevrolet Silverado, Ford F-Series or Ram pickup can expect to add $1,500 to the actual price of the vehicle to get it delivered.
The increase in delivery fees has been outpacing inflation since at least the early part of the new millennium, reports Cars.com, which previously analyzed the charge in 2013. Back then, it found delivery fees had been rising annually by an average 3.3% over the prior decade. That was in line with the yearly increase in new car prices. Over the past six year, however, delivery fees have been climbing an annual 6.2 percent, or significantly faster than new car pricing.
For consumers who have become increasingly used to seeing the words, “Free Shipping,” when buying online, the surge in what are more accurately known as “Destination and Handling,” or “D&H,” fees may come as a shock should they read all the way down to the bottom of a window sticker.
The reality is that there’s no such thing as free shipping. Companies like Amazon may charge a membership fee or build the costs into the price of the goods they sell.
When it comes to the automotive world, delivery fees are supposed to be neutral, according to Tyson Jominy, Power’s data chief told Cars. But there are those questioning whether they’re now helping hide some additional profits.
Fuel prices often get blamed for rising shipping costs. In fact, the cost of diesel has been relatively stable over the past decade, so that’s not a significant factor in rising D&H fees. The Cars study points to other factors, such as the upgrades trucking companies have had to make in their equipment, as well as the cost of complying with state and federal regulations – though the Trump Administration recently rolled back Obama-era rules cutting the number of hours a driver can spend on the road each day.
The trucking industry has also been struggling with a shortage of drivers, as TheDetroitBureau.com has reported. Spend time on any major U.S. highway and you’ll likely see the ads shippers have been plastering on their trucks looking for new drivers and offering significant increases in pay – fees ultimately passed on to consumers.
While many things can be bought online with “free” shipping, other items still carry fees likely to be determined by size and weight. That’s clearly a factor in automotive delivery fees. So, when you’re loading up a truck with Chevrolet Silverado pickups, you’re going to get fewer on each load than if the same rig was carrying Chevy Bolt EVs. Buyers will absorb the difference, helping explain why pickups generally carry the highest D&H.
What can be surprising is that imports may have a lower delivery fee than products built in the U.S. The fees also don’t vary from one location to the next. So, someone in Detroit purchasing a Ram pickup made at the plant in the suburb of Sterling Heights will pay the same amount as a buyer all the way out in San Diego. And it’s been decades since manufacturers would waive the D&H charges if a buyer picked the vehicle up at the factory – with the rare exception of some European marques that have special delivery programs for those who want to travel overseas and drive a bit before heading back to the U.S.
Delivery fees can take shoppers by surprise, something that may not really catch their attention until they sit down with the dealer to work out the details of a sale. Normally, the fees are not negotiable, but a customer can always press the dealer to find a way to offset rising D&H charges by cutting prices elsewhere, or perhaps throwing in floor mats or some other accessories.
Whether the surge in delivery fees will eventually level off is uncertain, but if recent history is any indication, you can expect to see the numbers go up again in 2020.