General Motors Hit With Class Action Lawsuit Over Destination Charges

A class action lawsuit has been filed against General Motors by disgruntled customers who claim the automaker’s target cost is misleading and misleading.

The lawsuit, which was filed in the southern district of California, has two plaintiffs alleging they did not know that GM made a profit on target fees collected from customers. According to Car Complaints, plaintiffs are California-based Robert Romoff, who recently bought a new Chevrolet Equinox 2021 with a target fee of $ 1,195, and Joe Siciliano of New Jersey, who has a new 2019 Cadillac Escalade with a Purchased target fee of $ 995.

The lawsuit alleges that GM is making a “significant profit” from the destination fees it applies to its new vehicles and is “misleading customers into paying far more than the actual cost of vehicle delivery.” Plaintiffs also say that a target fee has very little to do with how much it costs to move a vehicle from the assembly plant to a dealer and instead is a way for GM to inject “hidden surcharges” into its vehicle transactions.

“The target fee is generally understood in the automotive industry to reflect the manufacturer’s average cost to deliver one of its vehicles to a dealer,” the filing states, as quoted by Car Complaints. “This target fee is billed to the dealer and passed on to the buyer or renter of this vehicle. Consumers also have the expectation that they will bear the costs of an automobile manufacturer for the delivery of the manufacturer’s vehicles if they pay the “Destination Fee” as part of their new vehicle leasing or purchase. “

GM target fees typically range from $ 995 for smaller vehicles like the Chevy Spark and Chevy Malibu to $ 1,695 for larger vehicles like the Chevy Silverado HD.

An article published earlier this year by Consumer Reports attempted to shed light on rising target freight charges in the automotive industry. The report showed that target fees had increased from an average of $ 839 in 2011 to $ 1,244 in 2020 – more than 2.5 times the rate of inflation. David Friedman, CR’s vice president of advocacy, said the auto industry’s “relative silence about the rise in destination fees is a bit deafening,” and urged automakers to be more transparent about delivery costs.

“If they had a valid reason that wasn’t just driving up the price, they could actually point us to specific examples of costs that have increased in the shipping process,” Friedman said.

An independent consultant who spoke to CR for its story, Dan Bedore, claimed that target fees are actually a way for automakers to increase profitability.

“[Destination] is another lever that the company can use to increase sales, ”said Bedore. “It doesn’t take a mathematician to understand the value of a $ 100 addition to a company that sells 2 million units a year.”

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