The Costco Auto Program is available to members of the warehouse store, which sells everything from TVs to tires, apples or Apple laptops. Its auto program has been around since 1989, and Costco says more than 2 million of its members have taken advantage of its program for vehicle purchases over the last five years.
Before using this route to buy a new or used car, or getting a Costco membership in the first place, here's how the program works and a rundown on whether it's the best route to go for a good deal on a vehicle.
How Costco's Auto Program Works
The Costco Auto Program connects Costco members to participating dealerships that offer reduced car prices. Just call a Costco service center, or plug your preferred vehicle into the CostcoAuto.com directory— including details such as the make, model, and model year — and select the car. Costco then finds a local dealer that offers the car at a reduced price and sends you their contact information, and you can head there to buy your used or new vehicle.
Although a Costco call center can help you arrange a purchase directly, the online directory lets you compare reviews and figure out monthly payments as well, so it may provide a more thorough buying experience overall.
Costco doesn't receive a cut of the sales. Instead, dealers each pay Costco a monthly fee to participate in the program and enjoy the large customer base that Costco can direct their way. Because of this arrangement, Costco isn't loyal to any particular dealer, ensuring there's no conflict of interest over its price listings.
Costco trains salespeople at each participating dealer to interact with referred customers. Certified as authorized dealer contacts, these employees are expected to commit to Costco's price agreement and make customers feel relaxed. They're also tested randomly by Costco employees disguised as shoppers. Dealerships that fail to represent Costco adequately can be booted from the program.
The Benefits of the Costco Auto Buying Program
Many people find this program helpful, as the Costco price is fixed and no-haggle, meaning you don't have to negotiate with dealers on the spot.
In addition, the listings in the directory show the invoice price for each car — that is, the price the dealer paid the manufacturer for the vehicle — and the manufacturer's suggested retail price, or MSRP, which reflects how much the manufacturer thinks the dealer should price the car. This openness about each vehicle's value makes the program especially appealing to jaded car buyers.
If you want, you can agree to let Costco check your purchase agreement to make sure you received the agreed-upon price for the purchase.
Another benefit of the program is its range of options. The Costco Auto Program works with pretty much every new car automaker, depending on your region, and that includes mainstream brands such as Chevrolet and Honda, but also higher-end vehicles such as Cadillac and Volvo.
On top of the overall vehicle discount, Gold Star and Business Costco members are eligible for a $100 coupon off of parts, oil changes and extended warranty plans, and accessories at the dealership where the vehicle was purchased, or $200 for executive members.
For used cars, vehicles are eligible for Costco's auto program if the selling dealer has performed thorough inspections and repairs that comply with the brand's certified pre-owned standard. Those interested in used vehicles can also use the program to do a search for a specific car. To sweeten the deal, the reduced Costco pricing includes factory add-ons, and Costco members are eligible for manufacturer rebates as well. Costco lists all the special financing offers available at dealerships, helping you pick the best individual transaction for you.
The Drawbacks of the Costco Car Buying Program
One of the biggest drawbacks to this program is that you must be a paying member of Costco Wholesale Corporation to use it. A standard Costco Gold Star membership costs $60 per year, while a Gold Star Executive Membership with annual rewards costs $120 every year.
Also, you can't find out how large your discount is unless you visit the dealership, which has a Costco Member-Only price sheet for each vehicle. Although the average discount through the Costco Auto Program is $1,000, this number can vary quite a bit.
For new cars, Costco can list all of the vehicles available at one dealership that apply for its program what the price would be after their discount is applied, or the store can find the price of a specific vehicle using the vehicle identification number (VIN). That means it pays to research a dealership to see if the vehicle they have is acceptable in terms of equipment, color and if it qualifies for other incentives.
A vehicle that has to be ordered or transported from a port or another dealership may not have as many discounts foisted on it. Or it also means a buyer will have to travel beyond the closest couple of GMC dealers, for example.
Keep in mind, too, that you can use the discount price the dealer offers to negotiate with other dealers. Still, that's no guarantee that haggling at another dealership will yield benefits that are better than what they and the automaker offers. Some dealers and manufacturers will make customers pick between the Costco Auto Program discount or other limited-time specials.
Another drawback to the program is that, while its prices are solid, it rarely offers the best price you can find. After all, Costco can't control the price that dealerships list for each car before applying the discount, so dealers can easily adjust the original price to make the discounts less damaging to their profits.
Researching dealer specials and vehicles in-depth, shopping around, and comparing prices can potentially save thousands more than Costco Auto Program offers. And many banks and credit unions have group auto-buying programs.
Both the United States Automobile Association and the Affinity Auto Program have helped millions of people get cars at a discount. Consider every program before becoming a member just to save on this large purchase.
According to Costco, about 43 percent of dealership visits through the Costco Auto Program result in a purchase. Some customers trade in their old vehicles for a credit toward their new vehicle, making the final price even lower.
Costco also monitors their discount services carefully to ensure they're competitive, so you're likely to drive off the lot happy. All in all, the program has a lot going for it. The website, CostcoAuto.com, offers research tools such as a vehicle comparison module, which lets customers compare the features of two or three vehicles side-by-side, and an expert assessment of your preferred vehicle's performance record.
For any vehicle, you can also access a safety evaluation for it, a list of manufacturer incentives and rebates, a finance calculator to calculate your monthly payments, and a comparison of whether you should lease or buy the vehicle.
Costco provides a Member Advocacy Group to answer questions and help them get the best deals, and they periodically offer coupons and limited-time sales events to boost members' savings as well.
While it's not worth it to get a Costco membership for the accessibility of the Costco Auto Program, existing members can take advantage of it to take some of the hassle out of purchasing a new or used car. It still requires doing online research, taking test drives at an actual dealership, and creating a shortlist of prospective cars.
But for existing members, the Costco Auto Program may open doors to special discounts and make the membership worth it for more than toilet paper, eye exams, and free food samples.