GM Hit With Lawsuit Over ‘Destination Fees’ for New Car Sales
As the price of cars rises in an increasingly post-pandemic world, some General Motors buyers are going to court over “destination fees” that do not initially show up on the advertised price tag.
The company was recently hit with a proposed class action lawsuit by two car buyers who say they were not aware that GM makes a profit off of the fees, GM Authority reports. One buyer based in California says he paid a nearly $1,200 fee for a new Chevrolet Equinox, while a New Jersey man says he was charged a nearly $1,000 fee for a 2019 Cadillac Escalade.
The fees are vaguely associated with shipping cars from factories to dealership lots, but they vary widely between vehicles and with little rhyme or reason, Jalopnik points out. The buyers say the extra charges are simply designed to pad manufacturers’ bottom lines.
“The suit claims General Motors makes a ‘significant amount of profit’ off of the destination charges that it applies to its new vehicles and ‘deceives customers into paying far more than the actual cost of vehicle delivery,’” GMA’s Sam Mceachern explains. “The plaintiffs also say that a destination charge has very little to do with how much it costs to ship a vehicle from the assembly plant to a dealership and is instead a way for GM to sneak ‘hidden markups’ into its vehicle transactions.”
The suit comes as a global chip shortage has increased the price of cars on dealership lots in California and across the country. The average price for a new car jumped by 8% in April, compared to two years earlier. The average used car price hit an all-time high a month later.
Stuck With a Lemon? A California Lemon Law Attorney Can Help
While car prices rise, auto manufacturers are still having a hard time putting vehicles on the road that are actually safe to drive. Millions of vehicles are recalled around the world each year because of a variety of defects that put everyone on the road at risk.
GM, for example, recently recalled some 95,000 sport utility vehicles whose seatbelts the company says may not work. GM said the safety devices may break in the event of an accident, increasing the risk of an injury.
Fortunately, the California lemon law helps protect car owners in the Golden State. The law requires manufacturers to do repairs on cars while they are under warranty. It also forces the companies to buy back or potentially replace covered vehicles that they cannot or will not fix.
If you have been stuck with a defective vehicle, a California lemon law attorney at Bickel Sannipoli APC can help you understand your rights and take action.