Costco Auto Program

In 2013 I was living just north of Orlando and shopping for the F350 I would use for my upcoming fulltimer life. I have always ordered my vehicles so I sent my truck and options list to EVERY Ford dealership in the area, including each one's 'internet' sales manager.

I spent several days corresponding with some who I thought were giving me good ballpark quotes but I didn't see any great deals, so I went to Plan B - My credit union. Did the same thing but I still didn't like what I was seeing, so I went to Plan C - a 'Buyer's Broker'.

I had used a broker before with good luck so I sent off my requirements and waited. I did get back a pretty good quote, but in the meantime I had remembered about the Costco program. At this point I had spent several weeks emailing and talking with more then a few dealerships.

Plan D - Costco. I was already a member so I gave it a try. It's free - so why not ? I admit that I was surprised - The quote I got easily beat everybody else so I decided to take it and sent in my order. The only negative was that the dealer was in Jacksonville, but that didn't matter to me as I would be a fulltimer and would never have a local dealer anyway.

I was really curious about the program so while I was at the dealership I talked to the salesman about it. He was the designated Costco POC salesman and he told me that most of his business came from Costco and that he had to price his quotes 'really aggressively' for that program. This was at a large Ford dealer.

The rest of the order/delivery process went normally. I gave them a small downpayment and they ordered my truck. It came in about 6 weeks later and I drove up and picked it up.

Try starting the last week of Feb. Find 3 local and get their commercial sales to give you prices. Get the lowest price and say to the other 2, this other dealer says it's 100 lower, can you beat it. Keep playing the game til you drive them crazy and then. go to the dealer at 6 PM the last day of the month. Get a takeaway dinner and go in to the dealer and eat it. You will have them wiping sweat with their ties. When you finish they are going to jump and just way, OH, we already bought one! Don't pay for extras like dealer prep. All they do is pull off the plastic. Make them wash it, fill it with fuel and get a free oil change and wash too. Don't buy extend warranties. Be willing to wait til the next day for delivery. Take their loan at what ever %then go to your bank and get a lo int loan and buy it back within 3 days. Don't trade in a vehicle, sell it yourself as they add on your price and knock off the trade in price. We made about $4000.00 buying a Camry.

I love Costco and shop there frequently. But, not for my cars or trucks. They are arguably no better or worse than a dozen other "buying services" that are parasitic to the new car sales industry. They guarantee a price to the consumer which is never the lowest price in the market nor is it usually any lower than other services. For this they charge a monthly fee, simply to not be in violation of most state laws, and it averages $400-$500 per car delivered in the program by the participating dealer. This is a national average which dealer associations track.

For the consumer who prefers not to do the research or the shopping necessary, it is a viable and satisfactory alternative. You simply are not going to get the best price and should not be under that illusion.

JALLEN4 wrote:

Nate1979 wrote:

JALLEN4 wrote:
Costco and the other organizations offering a "car buying" program are simply leveraging their size and cutting themselves into a share of the auto sale. The dealer signs up for the program attempting to add incremental sales they might otherwise lose. Generally, there are some basic pricing guidelines the dealer will agree to and Costco {or others} receives a commission on the sale. The commission is an expense to the dealer and will be recovered in the selling price.

Costco does not receive a commission on the sale.

As a retired new car dealer, I can assure you I have paid substantial "fees" to participate in these programs. Whether it is per car sold, per lead generated, monthly set fee, or other means of compensation...the dealer is paying to have potential car sales delivered.

It would be naive to think Costco displays cars in their stores, advertises, and takes clerks time answering customer questions without being compensated. Call it whatever, compensation for involvement in the program ultimately is a commission for sales. Anything else is pure semantics. Dealing with a dealer who does not have to pay these fees, ultimately can well result in purchasing for a lower price. It is a good program for those who do not want to shop or for those who have little knowledge of how the system works. Otherwise, not so much.

Apparently being accurate in describing this is now just semantics. Very clearly who pays what in the Costco program is known. Dealers pay a fee to join the program - in essence it is an advertising cost for the dealer. No different than running an add on TV except for pricing rules. There is no commission paid to Costco per sale. Whether or not this adds to the price a Costco member will pay vs someone off the street I made no comment to. But I seriously doubt it. Dealers have all sorts of advertising costs and this is just one of them.

Nate1979 wrote:

JALLEN4 wrote:
Costco and the other organizations offering a "car buying" program are simply leveraging their size and cutting themselves into a share of the auto sale. The dealer signs up for the program attempting to add incremental sales they might otherwise lose. Generally, there are some basic pricing guidelines the dealer will agree to and Costco {or others} receives a commission on the sale. The commission is an expense to the dealer and will be recovered in the selling price.

Costco does not receive a commission on the sale.

As a retired new car dealer, I can assure you I have paid substantial "fees" to participate in these programs. Whether it is per car sold, per lead generated, monthly set fee, or other means of compensation...the dealer is paying to have potential car sales delivered.

It would be naive to think Costco displays cars in their stores, advertises, and takes clerks time answering customer questions without being compensated. Call it whatever, compensation for involvement in the program ultimately is a commission for sales. Anything else is pure semantics. Dealing with a dealer who does not have to pay these fees, ultimately can well result in purchasing for a lower price. It is a good program for those who do not want to shop or for those who have little knowledge of how the system works. Otherwise, not so much.

JALLEN4 wrote:
Costco and the other organizations offering a "car buying" program are simply leveraging their size and cutting themselves into a share of the auto sale. The dealer signs up for the program attempting to add incremental sales they might otherwise lose. Generally, there are some basic pricing guidelines the dealer will agree to and Costco {or others} receives a commission on the sale. The commission is an expense to the dealer and will be recovered in the selling price.

Costco does not receive a commission on the sale.

We are already Costco member, so I find out the Costco pricing on what I want and that is the most I will pay, I shop for better deals, so far have been able to get a better deal without Costco, but perhaps when I told them I had the Costco price and would NOT pay more than that, the ones that wanted my business knew they had to go lower... not a sure thing, but certainly a line in the sand that can useful.

I used the Costco incentive money to buy cargo mats, engine air, and cabin filters for the new Toyota.
Really easy.

I tried it once about 4 years ago. The dealer would not give the Costco price over the phone. When I went to the dealer, the Costco price was higher than others that I already had on the internet from other dealers.

I doubt that I will waste my time the next time I need a new vehicle.

Many people don't like to negotiate - if so then buying through Costco or similar buying programs might make sense. But I have no doubt you can buy cheaper if your willing to haggle and have patience - few do.