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My friend just bought a new car and paid a...

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Dear Tom and Ray:



My friend just bought a new car and paid a delivery charge of $415. We were
wondering if you could help us understand why he had to pay this charge? Keep in
mind that he picked up the car from the dealership; they did not drive it to his
house. Any information on this subject would be appreciated. -- Ryan

TOM: The "delivery" or "destination" charge represents the cost of getting the
vehicle from the manufacturing plant or the port of entry to the dealership,
Ryan.

RAY: They separate it out, so the vehicle appears to cost less. I'm sure you've
seen ads that say "only $17,995 plus taxes, title, delivery and DBP."

TOM: DBP?

RAY: Dealer Boat Payment.

TOM: Ah! Manufacturers say they average out all of their delivery costs and
charge a flat fee of $400-$500, no matter where you live in the "lower 48
states." Some charge a little more for cars delivered in Alaska or Hawaii, since
dealers don't have to contend with people "driving across the state line" to
save a little money.

RAY: And so, with this averaging system, if you happen to live 300 miles from
the manufacturing plant, you could end up paying the same destination charge as
someone who lives 3,000 miles from the plant.

TOM: That may not sound fair if you live in Cleveland, and are buying a Honda
built in Marysville, Ohio. But think of all the money you save on freight if
they send one over from Japan for only 500 bucks!
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