Costco Auto Program

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.