Costco Auto Program Review (Former Car Dealer)

Written by Ray Shefska

My career in the retail automotive business started in 1977. Buying a car doesn’t have to be anxiety inducing, stressful, or painful. Instead it can be confidence inspiring, fun, and convenient. Let me show you how.

October 28, 2020

Costco is one of the largest membership clubs in the world. With an estimated 100 million members worldwide, there are certainly some great perks to being a part of the wholesale club. Beyond bulk groceries and home-goods, Costco offers their members access to the Costco Auto Program to assist them with one of the most daunting tasks they face; buying a new car.

The Costco Auto Program serves hundreds of thousands of car buyers each year, and today we thought we would take some time to break down how the program works, if it’s a good value, how dealers are compensated, and more.

If you’re more interested in watching, be sure to click “play” on the video above. Without further ado, let’s dive in!

How does the Costco Auto Program work?

Let’s start by being brutally honest about what the Costco Auto Program is … It’s a lead generation service for participating car dealers. Not too dissimilar from services like TrueCar, Costco’s auto buying program has a network of participating car dealerships that pay a monthly fee to get access to leads from Costco. The program is actually not run by Costco at all, instead it is operated by Affinity Auto Programs, Inc, a company that specializes in creating buying experiences for different brands (i.e. Navy Federal Credit Union, and Costco, etc.).

In return for paying to be a part of the program, these dealers gain access to the leads that Costco is able to generate from their millions of members.

At its core, the Costco Auto Buying Program is a matchmaking service that dealers pay to get access to. Plainly, if you’re looking for the best possible car deal, you shouldn’t expect it from the Costco Auto Program.

Does the Costco Auto Program work for new and used cars?

Yes, the Costco Auto Buying Program supports both new and used vehicles. As a shopper you can use the online portal created by Affinity Auto Programs, Inc. to search for new or used inventory in your area. Once you have found something you are interested in you can then submit your lead and Costco will “handle the rest for you.”

Is the Costco Auto Program a good deal?

You get time savings and reduced headache because the prices are not negotiable, but you also are limited to the dealers that are in the program’s network. When using the Costco Auto Program there is certainly a tradeoff in selection and price.

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Since vehicles in the Costco Auto Program are not negotiable, you won’t have a chance to get further discounts on a car, truck, or SUV, even if the dealer would be willing to go lower. For some, that’s a-okay, because they simply want a car buying experience that doesn’t include haggling or negotiating. However if that’s the case, I’d recommend you go to a one price car dealership in your area that is not a part of the Costco Auto Buying Program and see what price they are able to quote you. They may be able to go lower since they are not paying a monthly fee to be a part of the Costco program.

How we like to use the Costco Auto Program

Getting a price quote from a dealership via the Costco Auto Program is easy. What we recommend you do is you get the price quote from a participating dealer, then take that price to a dealer that is not in the program and tell them you’ll pay $500 less. The dealer will take your offer, and you just saved an extra $500. It’s really that simple.

Costco Auto savings are different then the Auto Buying Program

Unlike the Costco Auto Buying Program, where you must purchase your vehicle from a participating dealer, Costco Auto Savings are applicable to any Costco member regardless of where they shop.

As of the time of writing this, Costco has $1,000 savings incentives for their members at Buick, Chevrolet, GMC, and Volvo dealerships. If you are a Costco member this means that those dealerships will happily provide you with the incentive that Costco is offering. The incentive doesn’t come out of their pocket, so they will be happy to apply it to your deal, just ask.

To keep up to date with the latest savings options for Costco members, click here: https://www.costcoauto.com/save/

Always negotiate ancillary products

Just because the selling price of the vehicle is not negotiable doesn’t mean you shouldn’t negotiate on ancillary products. Extended warranties, tire and wheel protection, GAP insurance, etc, etc. All of those things should still be negotiated.

Simple because the vehicle was not negotiable does not mean that the dealership will not try to make a pretty penny in the back office selling financing and insurance products. If you want to finance through the dealer or buy warranties that’s a-okay, just know that if it’s taxable, it’s negotiable.

Pros: Here’s what I like about Costco Auto Program

  • Ease of mind. You know what you are getting with the Costco Auto Program, and when it comes to buying a car, that usually isn’t the case.
  • Savings for Costco members can be applied regardless of if you use the program to buy your car or not. We love that Costco specific savings can be applied regardless of where you buy your vehicle (through their program or not). Be sure to take advantage of these savings if you’re a Costco member.
  • They’re honest. Costco isn’t hiding what their program is, you can read about it right on their website. I like the fact that they are open and honest about what the Costco Auto Buying Program is, and what it isn’t.

Cons: Here’s what I dislike about Costco Auto Program

  • Limited selection. If you are dead set on purchasing your next vehicle through the Costco Auto Program you have to understand that you may not find the exact vehicle you are looking for from one of the participating car dealerships.
  • Not the best price. As we discussed above, the Costco Auto Program does not guarantee you the best possible car deal.
  • A lot of emails from participating dealers. When you become a “lead” through the Costco Auto Program you will inevitably receive a lot of emails from participating car dealers.

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1 Comment

  1. Mike

    Thanks for the education.

    Reply

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