Costco Auto Program - Is It Worth It?
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Costco Auto Program - Is It Worth It?

By Josh Noel | September 8, 2021

The Costco Auto Program is available to members of the warehouse store, which sells everything from TVs to tires. Its Auto Program has been around since 1989, and Costco says more than 2 million of its members have taken advantage of the program for vehicle purchases over the last five years. Costco works with more than 3,000 dealerships and participating service centers across the country, which has allowed it to become one of the top three auto sellers in the U.S.

Before using this route to buy a new or used car, or getting a Costco membership in the first place, read below to understand how the program works. This will provide a rundown on whether it's the best route to go for a good deal on a vehicle.

How Does the Costco Auto Program Work?

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 vehicle at a reduced price and sends you their contact information. 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 complete buying experience overall.

Costco doesn't receive a cut of the sales. Instead, dealers each pay the warehouse store chain a monthly fee to participate in the program and thus enjoy the large customer base that's directed 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. In addition, Costco trains salespeople at each approved dealership to interact with referred customers. Certified as authorized dealer contacts or member advocates, 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. Participating dealers that fail to represent Costco adequately can be booted from the program.

It's important to note that Costco's auto purchase program website is operated by a third party, not by Costco itself. It's not a cause for alarm or reason not to use the site, but an indication that you need to be careful and aware of where you distribute your personal information.

Is the Costco Auto Program Good?

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, which is the price the dealer paid the manufacturer for the vehicle. It also shows the manufacturer's suggested retail price (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 ensure 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. That includes mainstream brands such as Chevrolet and Honda and higher-end vehicles like some from Cadillac, Audi, and Volvo. Costco members aren't limited to special deals on cars. Costco also offers deals on boats, ATVs, RVs, and in some states adaptive mobility vehicles.

On top of the overall vehicle discount, members are eligible for a 50% discount on parts, oil changes and extended warranty plans, and accessories at the dealership where the vehicle was purchased. They just need to take a member satisfaction survey within 30 days of their vehicle purchase. There is a cap on that discount. Gold Star and Business Costco are eligible for up $100 off, and Executive members get up $200 off of those services. All members are also eligible for 15% off parts and services from participating service centers.

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 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. In addition, Costco lists all the special financing offers available at dealerships, helping you pick the best individual transaction for you.

Part of the Costco website allows users to research the make and model of the vehicle they want to purchase. Working with Consumer Reports and other online review outlets, Costco provides reviews, specs, and detailed information on nearly any car model up for sale today. The information also includes safety ratings and a comparison tool, along with a financial calculator to help you make the most informed shopping decision possible.

Reviews from customers who've used the program report that the buying process through Costco was no-pressure and note that the dealer's representatives met the program's standards. Most positive reviews include notes on saving time and hassle in addition to saving money.

The Drawbacks of the Costco Car Buying Program

One of the most significant 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. The incentives also require you to be a member for a certain amount of time, so don't expect to sign up one day and get a new car discount the next.

Also, you typically can't find out how significant the discount is unless you visit the dealership, which has a Costco Member-Only price sheet for each vehicle. Costco claims that members do save money. The average incentive through the Costco Auto Program is $1,000, but this number can vary considerably.

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. 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, or 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 imposed. It may also mean a buyer has to drive further to avoid transportation costs and maximize savings.

Keep in mind 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 can offer. 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. Buyers willing to do extra work can probably find a better deal. Extensively researching dealer specials and vehicles, shopping around, and comparing prices can potentially save thousands of more dollars than Costco Auto Program offers. The program is intended for buyers who want a fair price and a smooth experience.

Many banks and credit unions also have group auto-buying programs. 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 to save on this large purchase. The best way to get the best price is to shop around, and you may find that your efforts turn up a much better price than those found through the Costco program or others.

Customer reviews also reveal further drawbacks to the Costco auto buying program. For example, buyers reported experiencing a barrage of sales calls and emails after registering interest in a vehicle. Some stated the calls continued after a purchase has been made or after the buyer states that they are no longer interested in the service.

Others report that their contact information made it into the hands of dealers and salespeople that they did not expect, such as an inquiry for a Toyota vehicle netting calls from other brands. Some said that the no-haggle policy didn't live up to the promise and that dealerships disregard the pricing that Costco provided in favor of their own, which is typically higher.

Other Considerations

According to Costco, about 43% of dealership visits through their auto program result in a purchase. Some customers trade in their old vehicles for a credit toward their new car, 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 company homepage, CostcoAuto.com, offers research tools such as a vehicle comparison module, which lets customers compare the features of two or three vehicles and an expert assessment of your preferred vehicle's performance record. For any car, you can also access a safety evaluation, 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. In addition, Costco provides a Member Advocacy Group to answer questions and help them get the best deals. They periodically offer coupons and limited-time sales events to boost members' savings as well.

While the Costco Auto Program isn't worth just getting a membership to save a little money on a car, existing members can use it to take some of the hassles out of purchasing a car. Of course, it still requires doing online research, taking test drives at an actual dealership, and creating a shortlist of prospective vehicles. But 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.

It's also important to remember that it can be worth having an independent pre-purchase inspection performed on a used car at a shop you trust even after an inspection at a dealer. Even certified used vehicles can have issues that escape the watchful eye of a dealer's service center.

Alternatives to Costco for Car Buying

Carvana is an online auto dealership that buys and sells cars without a physical dealership location. Users can search for nearly any year, make, and model vehicle and receive detailed photos, condition reports, and more. Carvana's pricing is typically in line with what is seen at other dealers, but there is no negotiation required. The company will also help you find financing and will deliver the vehicle to your home. You can also sell a car or trade one in at the same time.

Vroom is another online platform that offers used vehicles. Like Carvana, Vroom will buy and pick up your used car as well as deliver your new one. In addition, Vroom offers low-mileage vehicles that are under three years old and have a clean title.

CarMax is the original no-haggle dealership chain. While its prices aren't always the best, the company has a massive inventory and can ship a car across the country if you don't find one that you love at your local store.

We also can't forget rental companies. Though many are in a lurch right now to find new fleet vehicles, there are almost always several used vehicles for sale on the company websites. Keep in mind that, while rental cars have had all maintenance performed and are generally well maintained, people do not always treat a rented vehicle with the respect they would if it were one of their own.

Buying from a Costco alternative may save you money, but buying online doesn't always allow the same inspection and hands-on testing that going to a dealer would. Sure, you might save a few dollars and have the convenience of home delivery, but make sure you have thoroughly researched the vehicle and understand what you are buying.