The Costco Auto Program

The Costco Auto Program is a car buying process that has been around for more than 25 years. Costco as a company offers great deals on a wide variety of products but in 2008, Costco emerged as one of the leading car sellers in the U.S.

The Costco auto program has been described to be stress less and hassle-free. Instead of jumping around from dealer to dealer and getting different pricing and different bids, the Costco auto program makes it more convenient to purchase your dream car especially for those who hates negotiating and are willing to settle for a fair deal.

Though it was established in 1989, the Costco auto program has counted more than 1 million sales over just the last five years. Costco does not sell cars directly. Franchise laws still guarantee that nearly all retail new-vehicle purchases must go through dealers so can’t make direct sales. However, they partner with reputable dealers who relate directly with the customers.

Costco selects one dealership per brand in each area to participate in the program, offering that dealership a private customer pipeline.

The Costco auto program is a buying program that connects Costco members with dealerships promising to sell specific cars at specific prices. Costco simply arranges the deal between the dealer and the buyer and hence takes away the painstaking process of negotiation involved when one purchases a car from a dealer.

The Costco auto program makes the process of buying cars simpler and relatively hassle-free, and the increasing number of auto sales through Costco is proof that this is indeed making members happier.

The way the program works is that Costco has arranged pre-negotiated prices for their members through a network of car dealers. Dealers, in turn, pay Costco a modest monthly marketing fee to operate the program.

But while a buying service price is good, it’s rarely the rock-bottom figure for which a dealer will sell that car. Rick Borg, executive vice president of the Costco Auto Program said “The value we’re bringing to members is both price and the process, We’ve kind of taken away the need to negotiate.” Those prices are still the product of thorough research, shopping around, and hard-nosed negotiation. But they are relatively fair.

A price is not just determined, Costco go through the strict process of negotiation with the dealers, the company uses its bargaining power to negotiate discounts on vehicles for its members. Everyone appreciates a good deal, but aggressive pricing is far from Costco’s only focus.

This is simply how the Costco auto program works, one registers to become a member. Members choose the make and model they’re interested in, then Costco refers them to a local dealer who shows the customer the vehicle’s invoice price, the MSRP, and the Costco no-haggle price.

The Costco auto program offers wide varieties of the mass-market brands, most makes and models are available. They are yet to have any Ferrari or Lamborghini dealers on their program

Costco partner with one dealer for each car manufacturer assigned to a warehouse. These dealerships are chosen carefully by their dealer ratings, ability to deliver, proximity to warehouse, and comparative pricing.

Costco has a first attitude towards customers. They painstakingly train their sales reps to meet customer’s demands. They also make efforts to educate participating dealers so they keep their members pleased. Also they have different packages in their Costco auto programs for their members and attend to their needs effectively.