Is the Costco auto program worth it? Does Costco car buying program save money? What is the difference between buying a car from the Costco auto buying program and buying a car from the dealership? These are some of the very first and most common questions that pop up in your mind when you think about buying a car through the Costco auto program.
Established in 1989, Costco Auto Program facilitates member-focused car buying through Costco program and it has become one of the most popular and successful initiatives of the automobile industry.
If you ask what is the Costco Auto Program then the perfect answer would be; a special auto buying program by Costco that allows all the Costco members to buy discounted cars through participating dealerships. Basically, the program has been designed for the peoples who like hassle-free car buying experience and don’t want to go through any kind of tiresome procedure (research and negotiation) while buying the car.
The Affinity Development Group (ADG) has acquired all the auto program component of Costco’s services division and operates the Costco Auto Program for car buying. In the United States and Puerto Rico, this means of car buying is widely used and allowed Costco members to make more than 520,000 sedan purchases under this initiative in 2017.
In a survey conducted by Costco, over 96 percent of the Costco members trust the Costco auto buying service with respect to fulfilling their high expectations responded in positive and showed that the car buying program is the best in all three aspects – Value, Service, and Overall member experience.
With prearranged pricing, the program offers the best-ever buying experience to members, be it for a new car or pre-owned ones to-wheelers or four-wheelers. Along with helping them with vehicles, the service also entails the purchase of RVs and power sports products while also providing discounts on automobile spare parts and accessories.
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How Does Costco Auto Program Work?
While a major number of people are interested in buying motor vehicles using this beneficial service, “how does the Costco car buying program work?” is the most prominent question that keeps doing rounds in their minds before they enroll in the Costco membership program.
The Costco Auto Program has been designed in such an outstanding way that it connects the Costco members with associated dealerships that offer different types of new vehicles at very discounted prices. To use the service, members have to just make a phone call to Costco service center or register their preferred vehicle into the CostcoAuto.com directory online.
Here, they are required to provide all the details of the selected vehicle such as the make, model, and model year. Now based on the provided information, Costco finds a local dealer that offers the car having similar specifications at a discounted price and then sends the customers the contact information of the dealer to take things forward.
The Costco call center can also help you purchase the vehicles directly but them the online directory enables you to go through the reviews of Costco Auto Program, compare different options and also find out the difference in the monthly payment to be made for each of the available alternatives. This makes car buying through Costco more effective, giving members a better experience to gain.
You can also check out this video in order to learn how the Costco Auto Program works and how to get started with the process of car buying from Costco.
How Does Costco Make Money?
No, it doesn’t receive any cut of the sales. Rather the dealers associated with it pay the brand a fixed monthly fee and the latter allows them to participate in the program. The dealers, as a result, get a huge customer base that Costco brings to them. And since, Costco is based on a subscription business model, so the customers who want to shop at the Costco store buy a Costco membership in order to do so.
So in simple words, Costco makes money by selling memberships and getting fixed monthly fees from the dealers.
The Costco not only brings customers and dealers to a common platform for the vehicle dealing but also trains staff members assisting each participating dealership so that they can effectively interact with customers. The trained employees are certified as Authorized Dealer Contacts and are committed to the price agreement of Costco.
They are assigned the task of making customers feel comfortable in dealing with the participating dealers. To ensure, these staff members are efficient enough, the Costco employees visit them as shoppers and assess their performance. Only the efficient ones continue as the authorized dealer contacts.
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What is the Difference Between Buying a Car from Costco vs Buying a Car from the Dealership?
Traditionally, we all are buying cars from the dealerships or private owners for a very long time and when we hear a lot of praising things about the Costco Auto Program, we feel extremely curious to know the differences between buying a car from Costco and buying a car from the dealership.
So, if you are also one of them who want to know the actual difference between buying a car through Costco vs buying a car from the dealership then just go through these essential comparison points:
You will have to be a Costco Member
For car buying from Costco Auto Program, You must have the Costco Membership. Signing up with the brand, you will be allowed to specify the type of motor vehicle you want to buy. On the other hand, if you prefer buying vehicles directly from the dealership, you may get a lot of options to choose from, which might also include things that are not as per what you desire to purchase.
With Costco, you get filtered options based on the criteria you specify. Moreover, your membership brings to you the products at reduced prices. The non-members remain devoid of this facility. Hence, it is definitely worth getting filtered choices and avoid going through unnecessary options plus getting the most desired models of the vehicles at the most affordable rate.
Dealership Choice is Very Limited
When it’s Costco, the dealerships available to you are limited and there is a reason behind the same. The first reason is the cost of the dealership that the car dealers have to pay for participating in the Costco Auto Program. Not every dealer wants to pay for facilitating buying a car at Costco. Some of them in the market is satisfied with the number of customers they are getting.
The second reason is the discounted price, which makes a few of them doubtful about the revenue, which may be less. Contradictory to what they believe, Costco dealerships enable the dealers to offer vehicles at a discounted rate while driving more and more customers to purchase the available vehicles.
In short, the customer base of the dealers gets enhanced. Above all, the ones who pay to participate do so only because they are sure of the quality of the products they have to offer. Isn’t it?
Multiple Research Tools are Assembled into One Place
Whether you buy an outfit or a house, a great deal of research is needed to make sure you select the best one. The same applies to car buying from Costco. When you buy a car directly from dealers, you have to have multiple research tools to ensure you make valid comparisons before making your choice.
On the contrary, when you are a Costco member, there is no hassle at all. Costco auto buying program offers members all the required research tools to help them compare different products with respect to consumer reports, safety ratings, and financial computation, thereby comparing one option with other available options.
This, in turn, ensures you make the best selection. To validate, you may also research separately and find out how effective the comparison tools of Costco are.
The Price is Negotiated Upfront by Costco
Bargaining on vehicle purchases is always necessary as you might not be in a position to pay the price. When you directly deal with dealers, the negotiation is a bit difficult. This is because while talking to a salesperson, you have to consider their sales goals and incentives along with the inventory pricing while negotiating.
As a Costco member, you may get some advantages in terms of negotiation without you having to involve directly with the dealers. What Costco does is, it goes for negotiation upfront. The Costco people assess the national prices while taking into account the local market and then decide on the appropriate discount.
As they are offering multiple sales opportunities, the negotiation done is significant and hence the deal is profitable for members in every way.
Disputes are Resolved Swiftly
If you are already a Costco member or ever been one, you better know how feasible the return policy is. Hence, the instances of disputes are less or none. If members feel that they are not getting benefited from the process, they are free to withdraw.
Costco never wants you to remain dissatisfied. Whether it the efficiency of the car buying service Costco or the quality assurance for the products it brings you forth to, Costco makes sure you are satisfied in every way.
For the convenience of the members, the brand keeps the return policy generous so that even there are any disputes, they get resolves faster. After all, they know members have to pay a huge amount in buying vehicles and hence they must not remain disappointed at any cost.
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How to Buy a Car Through Costco Auto Program
To be ready for car buying at Costco, a series of steps are required to be aware of. As soon as you become a Costco member, you need to follow the following steps in order to buy a car from Costco:
Step 1: Visit the Costco Auto Program Website or Just Contact the Call Center
It is recommended to visit the Costco Auto Program website as it will allow you to compare all the vehicles available under the Costco car buying program. You can also browse inventories, calculate the monthly payment, and read customer reviews. You can also call the program’s call center and talk to the executives to understand the process. They will be glad to assist you through the process.
Step 2: Select the Vehicle You Would Like to Buy
Prior to car buying with Costco, Costco will ask you to specify the details of the type of vehicles you would want to opt for. On the website, as you forward, you can pick a vehicle you want. Select sedans, SUVs, pickup trucks, RVs, crossovers, sports cars, or whichever type of vehicle you desire to own or lease. This will help you filter your search.
Step 3: Customize the Features as Per Your Desire
Select the features and make the vehicles look the way you want. You can alter the features, trim, package, and exterior paint according to your desire. Well, the customization option is available to you only for those vehicles that are available for alterations. In short, the car you pick will determine if you get the customization option or not.
Step 4: Provide Your Contact Number and Your Costco Membership Number
As soon as you are done with the choices and specifications to be made for buying a car with Costco, the next stage is to provide your contact details along with the membership number generated for you by Costco Auto Program. Now based on your car choices and the provided information, Costco will find a local dealer that offers the car having similar specifications at a reduced price.
Step 5: Go to the Participating Dealership and Speak to the Concerned Salesperson
This is the stage where you will get access to the discounted price. Here, you will have to visit the participating dealership and meet the assigned salesperson. Talking to him will help you come across the vehicles meant for your purpose conforming to your specifications. Above all, he will tell you the reduced price you will be getting it for.
Step 6: Buy or Lease the Vehicle Under the Program
When you are ready to invest the amount in which the vehicles are available to you, you can buy or lease the motor vehicles under the Costco Auto Program. Remember, you are not bound to car buying through Costco if you are not convinced enough. You have all the right to say “No” to the deal. However, according to Costco, it successfully converts more than 40 percent of its members into purchasers of the Costco motors.
Pros and Cons of Buying a Car Through Costco Auto Program
Is the Costco auto buying program a good deal? This question can be truly answered by evaluating all the advantages and disadvantages of buying a car through the Costco car buying program.
Which is why I would suggest, you should not just take anyone’s word for it, you’ve got to consider all the pros and cons. And to make it easier for you, here we have listed them:
- You get vehicles at a fixed discounted price through the Costco program.
- No hassle at all as the research and negotiation part is completely handled by the Costco.
- The quality of dealers is assured.
- The level of service is high and it ensures maintenance of reputation and participation in the Costco car buying program.
- The range of options is huge.
- You can also find pre-owned vehicles that meet strict eligibility requirements
- Leasing is an option if you are not convinced with buying a car from Costco at the price fixed.
- You have to be a Costco member to enjoy the benefits.
- The discount price is accessible only when you meet participating dealerships personally.
- The offer is not necessarily attractive. Sometimes, it may be disappointing.
- You may not get the models as specified.
- The dealers decide the price and discount and not the Costco car buying service.
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10 Reasons Why Do People Like Buying a Car through Costco
After going through all the above-explained information regarding Costco car buying, now you know what is the Costco auto program and how does it work? How to buy a car through Costco car buying program and what are the pros and cons of buying a car through Costco auto buying program?
So, now it’s time to find out why people are obsessed with buying their cars through the Costco program and what are the top reasons. Here we go:
1. You Get Non-Negotiable Savings
When it comes to bargaining on a purchase, Americans hardly go for it. According to Autolist, 48% percent of the US buyers find car prices negotiation the worst part of the car buying experience whenever they buy directly from the dealers.
But with the help of the Costco Auto Program, you get a chance to enjoy non-negotiable savings as the brand does the negotiation on your behalf. Costco makes sure they don’t have to go through any haggle when it is there to promise the best price for the best products.
2. Costco is Selling More Cars Than Ever Before
Car buying from Costco at a discounted price and selling the vehicles at a common platform without having to strive for customers are two major reasons that drive both consumers and buyers towards Costco Auto Program respectively. The dealers pay a fee and associate with the Costco brand to make their vehicles available to the public at a rate that reaps profit for both of them i.e. consumers and themselves.
According to a Business Insider report, Costco is selling more cars than ever before just by offering one key perk: Fixed Price (the price is negotiated upfront by Costco Auto Program).
A number of dealerships participate in the program, thereby making available a huge number of vehicles to interested buyers, giving them a lot of options to choose from. Hence, customers prefer enrolling in the program for more and more options with quality assurance.
3. You Can Buy RVs and Other Vehicles from Approved Dealerships
When you hunt for vehicles, you may not necessarily be looking for something for personal use only. It may be for commercial purposes too. Costco understands this very well and hence it makes available dealerships that offer all kinds of vehicles for your varied purposes. From RVs to sports cars to sedans to SUVs to trucks, Costco has every possible option to help interested Costco car buyers.
The quality of options is assured and the products bought can be used efficiently for both personal and professional purposes. The dealers who participate in the selling and buying a car with Costco program are approved and their deliverable is well-trusted. Along with automobiles, the customers also get a chance to buy other auto accessories and parts at discounted rates.
4. Pre-Owned Vehicles are Fair Game
16% percent of Costco Auto Program (CAP) sales in 2018 marked the purchase of factory-certified or pre-owned vehicles. There are people who have limited budgets and the discounted price too could be too much for them to pay. Such a group of people looks for used cars so that the price is not too heavy for them to pay.
While the new ones reach the sales venue directly, the used cars undergo dealer inspections and are reconditioned to make sure they meet the factory standards and are suitable for the market.
Even the used cars come with an extended warranty when it’s through the Costco auto buying program. As a result, the buyers can be assured of getting the best quality vehicles and their spare parts and that too at a very affordable rate.
5. You Can Save on Parts, Service and Accessories Too
Costco Auto Program is all about automobiles. Along with the vehicles, CAP also includes the sale of automotive parts, services, and accessories at a significant discount. At the participating car buying service Costco centers, you will find the accessories at huge discounted rates. After all, an automobile is nothing without the parts that accompany its operation.
Around $500 CAP savings are recorded when the dealing is handled under the label of the Costco Auto Program. However, there may be some exceptions to be applied. In fact, the member requests for parts and services as received by CAP members are quite high, roughly accounting to 250,000 in 2018, which is 68% more than in 2017.
This shows that the demand for automobile parts and accessories is in no way less significant than the automobile itself for the Costco auto program for car buying.
6. You Get the Assistance of Certified Costco Auto Program Dealers
Costco Auto Program deals with bringing consumers and dealers on a common platform for the sale of automobiles and their parts and accessories in the US. Hence, it has to ensure that the people involved in the process from its side are well-trained and well-aware of what they are actually asked to do.
When you associate with Costco for a deal, you get guided by the best individuals who are certified Costco Auto Program dealers. They are trained beforehand to make sure nobody in the process remains confused regarding any aspect of the dealing.
Whenever a common platform brings two different categories of people together, establishing a comfortable and convenient connection between them is the most important thing. And Costco tries to do the same with the help of the certified dealers.
7. Transparency is the Most Important Factor
Costco doesn’t keep anything hidden when the members enroll to get helped. And this is one of the things that they necessarily ensure. They remain transparent to the members involved. When people are presented with the pricing as fixed under the Costco Auto Program, the brand allows members to review the vehicle’s invoice price estimation. This is the price that the dealers allegedly pay the manufacturer.
The MSRP is also mentioned clearly. This is the sticker price as suggested by the manufacturer himself. The Costco team makes a valid comparison between the discounted prices against the dealer prices and ensures it remains competitive enough in approach to make members crack the best automobile deals. To help them in buying a car from Costco, there will be Costco advocates to assist them at each and every stage of the dealing process.
8. Costco Does Not Make Money Off the Sales
If you are among those who think Costco earns through the commission from the sales that is achieved through the Costco Auto Program, you need to know the truth. The dealer pays a monthly fee to the brand to participate in CAP. This monthly charge is the income for the brand.
The Costco people have no loyalty to any dealer or manufacturer. Because of their financial independence in terms of loyalty or commission is what makes the overall program and the associated people be trusted as better advisers for buying a car through Costco.
While most of the intermediates look for high commissions on the sale of the products they host, Costco remains one of the entities that remain out of any such financial obligations (in any kind of sale) from the manufacturers and dealers.
9. Sometimes There are Special Deals for Limited Time (Huge Discounts)
Though Costco Auto Program offers automobiles and the parts and accessories related to them at a discounted rate, there are special times of the year when you can expect surprisingly high discounts under various reward programs. Having a membership for the program, however, becomes really useful in such a scenario.
During such huge discount seasons, buyers are eligible to receive multiple rebates by manufacturers, thereby expecting incentives that Costco lists online can offer. For certain cars, the automobile representatives may offer limited-time specials.
For example, the program recently offered an 8% discount on the MSRP of six new models of Audis last summer, which came as a huge surprise to buyers. The Costco members have also come across multiple such deals with special offers in Hondas, Subarus, BMW, Volvo, etc. in the past few years and they can also expect the same in the future.
10. No Pressure, No Commitment to Buy
There are people who think that having a Costco membership makes it compulsory for them to buy an automobile put on sale. You should know that you are never bound to car buying at Costco if you are not really convinced. After making the specifications clear on the website, when you meet the dealer personally and when your type of car is found in stock, still there may be something that you may not like.
The CAP price is only revealed when you meet the dealers in-person. Hence, the price at which the car is being made available to you could be the reason behind your decision to not buy the available option. In such a scenario, you have all the right to say NO to the deal.
The above-mentioned points are the biggest reasons that make people enroll for the Costco auto program for car buying rather than connecting with manufacturers and dealers directly. From how does the Costco car buying program work to what are the advantages of the same, the reasons specify everything that you may want to know before you become a CAP member.
Is Costco Auto Program a Good Deal?
I think the Costco Auto Program is one of the best car buying services that are completely free from any influence of the dealers as the representatives do not get paid through loyalty. Costco has a subscription model that dealers have to pay to participate in the Costco auto buying program that it keeps hosting.
The dealers from various corners of the world participate in the same to target more and more consumers. The consumers, on the other hand, trust CAP fully as they know it will act as the best assistant to the desires they have with respect to having personal or professional vehicle ownership.
There is no other auto buying platform where you can specify the details as per your wish, including the decision of what color automobile you would like to have. With Costco things are turned up the way you want. After all your specifications reach the representatives, your personal meeting with the dealer having “your type of car” available with is fixed.
Above all, if you feel you don’t want to buy it because of any whatsoever reason, you are free to refuse. With such feasibility and flexibility, the Costco car buying program and car buying from Costco has become one of the most trusted ways of purchasing automobiles.
While finalizing the decision of getting a Costco membership, you may go through Costco Auto Program review sections online to make sure you are ready to go for it. However, there will hardly be any reason that would limit you from becoming its members. It’s just awesome and you must try it for once.
So now if you ask me, Is the Costco auto program worth it? Does Costco auto program save money? My answer is “Yes”. Absolutely, buying a car through Costco worth it and you can save some decent amount of money.
Frequently Asked Questions About Costco Auto Program
While many people are looking forward to getting the Costco membership but their doubts restrict them from moving forward. There are some frequently asked questions (FAQ) about car buying from Costco, which when answered will help you decide if the Costco auto program worth it or not. Here we go:
Yes, of course, you can buy a car through Costco and that too in a very hassle-free way.
You can become a Costco member and browse through the website properly to follow the series of steps as discussed above under “How to Buy a Car Through Costco Auto Program?” section.
Yes, it does. As already discussed, it offers the automobiles at a discounted rate. In fact, in some seasons, Costco comes with incentive programs under which members get a chance to get even better and more he discounts on deals.
The benefits are huge and the process is hassle-free. Hence Costco auto buying program is definitely worth investing in. The answers to the above questions are enough to show how effective will be your decision to become a CAP member to buy your desired automobile.
Costco does not demand any loyalty or commission from any party, be it customers or dealers. It only promises the latter of the best customer base while to the former, the best and most efficient automobile. Only the subscription from both the parties acts as the profit for Costco.
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