Thursday, August 11, 2011

Nissan LEAF Destination Charge

A friend of mine recently asked me why I was so worried about the Destination charge when my dealership representative promised me not to charge it.  As the issue is complicated I feel it only proper that I explain it here for all to see that it's not a knock against any dealership or Justin Maynard, who I can't recommend more!

Technically, the dealer doesn't charge the destination fee, NNA (That's a link to the Nissan North America private dealer website) charges it and generally the dealers pass that on to the consumers.  I don't know if I've made this clear but I really like Justin Maynard, who wrote up my offer, and I would buy from him again in a heartbeat.  In fact, I have great respect for Mohamed, Carlos, Sharron, Bruce, Chris, Brian, J.D. and any other LEAF specialist I've spoken with in the area and hope to be posting my reasons for the agonizing decision I made to choose Nissan of Chantilly someday soon!  In fact, it's my sworn promise if I don't take possession of the LEAF I ordered that I will make absolutely sure Justin is able to sell it for a tidy profit in my stead.  And I'm sure just as orphaned Chevy Volts have been selling within 36 hours, any area LEAFs will do just as well.

Now, I'm sad to say many dealers don't know that the destination charge is not part of the price quote or MSRP.  I don't consider this their fault.  This is a fairly new process and mistakes, if made, are never done as a means to pull the wool over the customer's eyes.  Much as car dealers may be maligned for some reputed antics, remember they are human beings and are doing their best not just to sell you a car but to make you a satisfied customer so that you will come back again and again.  Be thankful that we have so much choice of dealership here in the Mid-Atlantic region; it's this competition that contributes to keeping most dealerships honest.

Now, we don't know the Invoices for the 2012 Nissan LEAF but as estimated on the My Nissan LEAF website, We know the profit margin on the vehicle itself is about 4.24% for a total of $1,582, which matches what Bruce at Herb Gordon Nissan quoted me last month.  Contrast that with the Accessories, also known as Port Options, which have about a 20% profit margin over MSRP.  For example, my car order, with fully-loaded options, comes to about $282 profit for the accessories in addition to the $1,582 profit for the vehicle for a total of $1,864 net profit.  The dealer doesn't get a penny of the Destination charge, however, and so any reduction in the remaining $850 cost comes directly out of their profits.  It won't eliminate the profit, but it will reduce it to $1,014, still a tidy sum.

Now, as I said, the Dealer can't control the Destination charge, which is why, when you order your car, on the Nissan Customer Dashboard, you see this disclaimer:

MSRP excludes tax, title, license and $850 destination charge.

Again, this isn't from your dealer, this is directly from Nissan North America; don't blame your sales person!  Tax, title and license, obviously, will vary from state to state so it's not fair to include that in the price.  You did expect to pay sales tax and registration fees, didn't you?  So Destination is yet another charge on top of this, which your dashboard has listed since the time you ordered as a warning to you.  The value of the Destination Charge may vary from state to state, but Nissan can calculate that and report it on your Order Details page just fine.  It's quite reasonable for them to charge it — after all, they're shipping the car all the way from Japan — but despite having said all this, I don't have to like it.

Now, when Justin and I discussed the quote he was going to send me, we agreed no extra charges, that Transportation, Destination and everything else would be covered under MSRP.  And I honestly think he truly believed that at the time.  I of course noted MSRP would still not include Taxes, Title and Licensing, as it never should, and we agreed there too.  This is why whether I take the car or not, I am happy to offer him and his wife dinner for 2 on me to say thinks for being such a good sport in this process.  But that still begs the question, will I take the car?

Well, I've listed some reasons against the 2012 LEAF vs. the potential for the 2013 LEAF here before and so part of my hesitation to take possession stems from that discussion.  In the end, as I calculated in the My Nissan LEAF forums, my car's take-home cost should come to 1 of 2 costs:

  • $39,848.39 (Destination Charge rolled into MSRP Profit)
  • $40,723.89 (Price includes $850 Destination Fee)

Both prices include tax, title and registration; license plates aren't included since I will try to order my plates through the DMV separately.  I do have a plate in mind but because named plates are so competitive in Virginia, I'm not going to post it here, but I will say it's related to one of my other blogs.

In any case, I wanna keep my car cost under the dreaded $40,000 mark.  And that's why I may just walk away.  My current car is a 2001 Toyota Avalon (now an 11 year old car with over 180K miles on it) and although fuel efficient for it's class at the time, it's no hybrid, never mind electric.  I'm itching for a change but I've waited this long, I can wait a bit longer, especially when faced with a $1,062.53 annual property tax bill.  But at the time I paid around $35,000 for the vehicle, very near to MSRP since I did my research tough I gave a little back on the port options like a glass breakage sensor.  In my book, that was an expensive car, but it had leather seats, a 6-disc CD changer (which has been broken for about half the life of the vehicle thus far), heated seats, sleek design and a quiet, smooth ride.  All in all, it's a nice car and I got what I paid for.

The LEAF, by contrast, is a souped up compact with a lot of nice bells and whistles, like RFID entry and CARWINGS and lots of other features not available in 2001 that are now standard on even the smallest cars.  What you're paying for on the LEAF is a freedom from the pump — that and a really bad Yen to Dollars exchange rate.  You could save hundreds in fuel cost by charging at home vs. paying the ever-rising price of gasoline, but then knock a G off that for the Car Tax and how many years does it take to equalize the expense?  Well, I'll save that calculation for another post, but it will take some time even with the Federal Tax Credit of $7,500 which I can take advantage of early next year if I take possession of the LEAF in November.

So that's the calculus; and now you know.  So what do you think?  Should I take the car even if it cracks $40,000?  Should I walk away?  Should I wait for a Tesla Model S, which can take full advantage of my 19kW EVSE and get 300 mi (483 km) per charge?  Should I just take the LEAF and flip it in 18 months for a late-model-year 2013 LEAF with the 6.6kW charger option?  Or should I just convert it to a Lease for 3 years with a $500 or so annual premium on my 24K miles per year requirement?  What should I do?