Over the last few years, Costco has quietly become a big player in an area that it is not really associated with: buying cars. Since 2008, Costco US has doubled the number of cars that their members have bought through the Costco Auto program to a whopping 398,875 cars last year. The only auto retailer that outsells Costco is AutoNation with 533,000 vehicle sales last year. Strictly speaking though, Costco is more of a referral agent than an actual seller of vehicles.
I’ve written about Costco Auto a number of times over the years, and everyone (pretty much) has only great things to say about the deals to be had by purchasing your vehicle through Costco. I think what people really appreciate is that the prices are better than they could get by going directly to a dealer, and of course the whole point of the Costco Auto program is that you don’t even have to haggle with anyone for the outstanding prices. Here’s an example of how great the Costco Auto program can be for buying your next car:
Ron Schurter didn’t bother visiting a dealer when he was in the market for a new car. He hit his local Costco. There was no haggling. Or upselling. There was just the price the warehouse retailer offers its members: about $39,000 for a 2015 Toyota Highlander, $4,000 less than the manufacturer’s recommended price. Schurter signed the contract and picked up his SUV from a Toyota showroom. “I’ve been telling everybody,” says the 75-year-old retiree from Yorba Linda, Calif. “I probably won’t shop anywhere else.”
As I mentioned, Costco doesn’t actually sell you a car. They work with Affinity Auto Group, an auto-buying service, that Costco members go through to make a purchase from a local dealership. Costco is pretty big, as you have probably noticed, so they have the clout to push local dealerships selling through Affinity Auto to give Costco and their members the best prices possible. One local partner, a GMC dealership on Long Island, says Costco’s tough negotiations mean buyers save as much as $1,000 per vehicle. And that doesn’t even include all of the other perks that car makers often offer to Costco members that make purchases through Costco Auto. For instance, GM often offers $500.00 Costco cash cards, as well as low no haggle prices, to attract buyers through Costco. These types of incentives led to fourth quarter sales of 43,300 GM vehicles through Costco, or 6% of GM’s domestic sales, in areas of the US where foreign brands dominate. So, it’s good for members and it’s good for automakers. But what does Costco get out of it?
What might be the most amazing part of the Costco Auto program is that they don’t actually make any money through member purchases! This is purely a service that Costco offers to keep members happy, and of course, keep them signing up for membership. Costco even sends out mystery shoppers to make sure the dealerships are really offering the right prices and are being good to members.
When Costco Auto first started up they didn’t have a huge list of local dealership partners available to members.. And even fewer automakers were wanting to take part in national promotions. However, it is a very different story now. They have local partners selling pretty much every available brand and have gotten so big that they even have a waiting list of dealerships that would like to participate. And, even better for members, the big automakers are coming to Costco with special deals. Costco Auto has definitely come a long way in the eight years that they’ve been around.
You can find out all about the Costco Auto program, through their website where you can find all of the details that you need to get a great deal on your next vehicle. Be sure to pay attention to the Special Offers section that details all of the current offers from each automaker.
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