Is the Costco Auto Program Good?
Written By
Peter O'Neil
Published
May 3, 2024
Discover the advantages and disadvantages of the Costco Auto Program to decide if it meets your needs. Uncover the truth before making a decision.
Introduction
The Costco Auto Program is a service that connects Costco members with automotive dealerships offering prearranged vehicle pricing. While not directly operated by Costco Wholesale Corporation, the program is run by Affinity Development Group, Inc., Dealerships included in the Costco Auto Program pay a "participation fee" according to the disclaimer at the bottom of the CostcoAuto.com website.
A summary of the salient points of the Costco Auto Program are:
Costco and its affiliates do not sell cars or engage in negotiating car transactions.
Vehicles offered through the Costco Auto Program are subject to availability and have prearranged prices with participating franchised dealers.
Dealers pay a fee to participate in the Costco Auto Program.
Some vehicles might not be included in the program.
The actual savings from using the program can vary depending on the vehicle, dealer, and geographic location.
Vehicle information on the Costco Auto Program website is supplied by third-party sources.
Costco Auto Program, Costco Wholesale, and Affinity Development Group do not provide any warranties or guarantees for the vehicle data provided.
The Costco Auto Program allows Costco members to access pre-negotiated pricing on new cars from participating dealers, making the process streamlined potentially saving them money on the purchase. Costco Auto Program does not make any claims as to the level of savings.
Additional Discounts and Incentives:
Costco members can get a 15% discount (up to $500 per visit) on parts, service, and accessories at participating service centers.
Costco members can take advantage of manufacturer rebates, incentives, and limited-time sales events through the Costco Auto Program.
The Costco Auto Program also offers special pricing and incentives on a variety of Chevrolet trucks, SUVs, and crossovers.
Benefits Advertised by Costco:
High dealer standards: Participating dealers must meet certain standards
Simple buying process: Streamlined car-buying experience
Great Pricing: Pre-negotiated prices for Costco members
Full Support: A toll-free number is provided to reach Affinity Development Group
Who is the Affinity Development Group?
Origins and Acquisition
Affinity Development Group (ADG) acquired the auto program component of Costco's services division in 1993 after Costco merged with Price Club. The Costco Auto Program was initially launched in 1989 as part of Price Club's services division to meet the needs of members looking for a hassle-free way to buy a car.
Growth and Expansion
Since the acquisition, ADG has built the Costco Auto Program into the largest member service in the automotive marketplace. In the past 5 years, dealerships participating in the Costco Auto Program have sold more than 2 million vehicles.
Mission and Focus
ADG's focus is on providing value, a simple dealer process, and a hassle-free buying experience for Costco members. ADG's mission is to provide their dealer and manufacturer partners the tools and resources they need to gain and retain lifetime relationships with Costco members. ADG's goal is to leverage their 30+ years of experience connecting their partners with Costco members to help them achieve higher closing ratios and inspire loyalty to their brand.
Relationship with Costco
ADG continues to develop and enhance the Costco Auto Program's offerings to Costco members while driving quality buyers to their dealer partners. However, it's important to note that ADG is an independent company and not an affiliate of Costco Wholesale Corporation.
Data Collection and Privacy
ADG collects various categories of personal information from Costco members, participating dealerships, and other sources to facilitate the car-buying process, provide customer support, and for other business purposes. Costco members have certain privacy rights under applicable state laws, such as the right to access, delete, and opt-out of the sale or sharing of their personal information.
Operations and Employment ADG has call center operations in Reno, NV and San Diego, CA, where employees work as Member Advocates, Customer Service Representatives, and other roles. ADG provides good benefits like health insurance, 401(k) matching, and generous bonuses, but salaries are reported to be below average. There are limited opportunities for advancement within the company, and some managers are criticized for lacking leadership experience.
Relationship with Dealerships The Costco Auto Program is essentially a lead generation service for the participating dealerships, who pay a monthly fee to access leads from Costco members. The Costco Auto Program is operated by Affinity Auto Programs, Inc., not Costco Wholesale Corporation.
Eligible Vehicles
Vehicle Selection and Availability
The selection of vehicles available through the Costco Auto Program may be limited compared to shopping the entire market independently. Not all makes, models, and trims are offered through the program. However, new and certified pre-owned vehicles, as well as leases and RV purchases, can be made through the program.
Limited Inventory and Negotiation While the Costco Auto Program allows Costco members to access pre-negotiated pricing on vehicles from participating dealers, the selection is limited, and prices may not be the absolute lowest as negotiation is not permitted.
New and Used Vehicles, RVs The Costco Auto Program enables Costco members to purchase new and used vehicles, as well as RVs, at pre-arranged pricing from Approved Dealers. It offers a wide variety of recreational vehicles (RVs) in addition to new cars and trucks.
Eligible Chevrolet Models Costco members can take advantage of special pricing and incentives on a variety of Chevrolet trucks, SUVs, and crossovers through the program. The eligible Chevrolet models include the Silverado 1500, Silverado 2500 HD, Silverado 3500 HD, Colorado, Tahoe, Suburban, Blazer, Trailblazer, Traverse, and Equinox.
Participating Dealers
Dealer Selection and Requirements
The Costco Auto Program provides a hassle-free car buying experience by connecting members with pre-screened dealers. However, Costco members are required to use the program's designated dealers, which may not be the closest or most convenient option for some buyers.
Authorized Dealer Contacts
Not all dealers participate in the Costco Auto Program, and only Authorized Dealer Contacts can assist Costco members. Costco members must find their dealer through the Costco Auto Program to get the discounted pricing. Going directly to a dealer can result in missing out on the Costco-negotiated price.
Dealer Network and Accessibility
The Costco Auto Program has a nationwide network of participating dealerships, but the selection may vary by region. Costco members can enter their zip code on the program's website to locate nearby participating dealers. While the program aims to provide a convenient car-buying experience, the limited number of participating dealers may not offer the best options for all members.
Dealer Incentives and Compensation
Participating dealerships pay a participation fee to access leads from Costco members through the program. Dealers may offer additional incentives or discounts to Costco members to encourage sales and build brand loyalty. The Costco Auto Program serves as a lead generation service for participating dealerships, providing them with potential customers from the Costco member base.
Dealer Standards and Oversight
The Costco Auto Program has established standards and requirements for participating dealerships to ensure a consistent and transparent buying experience for members. Dealers must adhere to the program's guidelines and pricing structures to maintain their participation status. However, there have been reports of some dealers attempting to add markups or fees, which can negate the intended savings for Costco members.
Buying Process
Locating Participating Dealers
Costco members can use the Costco Auto Program website to request a referral to a participating dealership to receive member pricing on a desired vehicle. They can enter their zip code on the program's website to locate nearby participating dealers.
Pricing and Negotiation
No upfront pricing - you won't know the final purchase price until you visit the dealer. You may still need to negotiate with the dealer to remove unwanted add-ons, even with the Costco Member-Only Price. It is recommended to use the Costco Auto Program to get a price quote, then try to negotiate a lower price at a non-participating dealer.
Streamlined Experience
The program aims to provide a streamlined car-buying experience with enhanced customer service from specially trained dealer contacts. The Costco Auto Program provides a non-confrontational shopping experience, with Costco's Member Advocacy Group available to help resolve any issues with the dealership.
Data Collection and Privacy
The Costco Auto Program collects personal information, such as personal identifiers, commercial information, device/internet/network activity information, and inferences, which is used for purposes like locating participating dealerships, responding to requests, tailoring content/ads, and providing market updates. Costco members have certain privacy rights under applicable state laws, including the rights to access, delete, and opt-out of the sale/sharing of their personal information. The Costco Auto Program's privacy policy is separate from Costco's privacy policy.
Pros & Cons
Pros
The Costco Auto Program offers pre-negotiated pricing on vehicles from participating dealers, potentially providing cost savings for Costco members.
The program aims to streamline the car-buying process, offering a hassle-free experience with enhanced customer service from specially trained dealer contacts.
Costco members can take advantage of additional discounts and incentives, such as a 15% discount on parts,service, and accessories at participating service centers, as well as the ability to combine prearranged pricing with manufacturer rebates and limited-time sales events.
Cons
The competitiveness of the Costco Auto Program pricing is not very clear from the program or from member reviews.
The program's pricing and availability can vary by location, so the benefits may be more significant in some areas than others.
The program is built for the mass market and serve a wide number of consumers without individual attention from the Affinity Development Group.
Alternatives
The Costco Auto Program operates similarly to other car buying services like TrueCar, acting as a lead generation platform for participating dealerships. However, the Costco Auto Program is often compared favorably to services like Edmunds, Kelley Blue Book, and TrueCar, as it may offer better pricing and discounts for members.
While the Costco Auto Program provides pre-negotiated pricing and discounts on vehicles, it's important to note that other options are available for car buyers. Credit unions and organizations may also offer car buying assistance programs that can help negotiate prices. Additionally, directly negotiating with dealers yourself, even across a wider geographic area, may yield better deals than the Costco Auto Program.
For California residents, the CarOracle Auto Buying Program presents an alternative option that aims to provide a transparent and hassle-free car-buying experience with competitive pricing and a wide selection of vehicles. This program could potentially address some of the drawbacks associated with the Costco Auto Program, offering a more consistent and satisfactory experience for car buyers in the state.
A comparison table of features between the Costco Auto Program and CarOracle Auto Buying Program is available here.
Conclusion & FAQs
The Costco Auto Program offers a unique car-buying experience for Costco members, with the potential for cost savings through pre-negotiated pricing and additional discounts. However, it's crucial to weigh the pros and cons, as the program may not consistently deliver the promised hassle-free experience or the best possible deals. Factors like limited vehicle selection, lack of negotiation flexibility, and inconsistencies across dealerships can impact the overall value and satisfaction.
Ultimately, the decision to utilize the Costco Auto Program depends on individual preferences and priorities. For California residents, the CarOracle Auto Buying Program presents an alternative option worth considering, as it aims to provide a transparent and hassle-free car-buying experience with competitive pricing and a wide selection of vehicles. If you are in California and looking for a new car, consider the CarOracle Auto Buying Program. Exploring multiple car- buying avenues can help ensure you find the best fit for your needs and budget. This video on the topic maybe helpful as well.
Q: Is the Costco Auto Program beneficial for purchasing a car?
A: Yes, the Costco Auto Program is beneficial as it offers savings on pre-owned vehicles that adhere to specific criteria. This includes factory-certified pre-owned cars that have undergone thorough inspections and reconditioning to ensure quality. These cars often come with an extended factory-backed warranty.
Q: Can you save money on new cars through the Costco Auto Program? A: Indeed, the Costco Auto Program provides Manufacturer Incentives, which are savings linked to the specific type of vehicle you're interested in. These incentives are particularly advantageous as they can be combined with other rebates and limited-time offers that are currently available.
Q: Do members of Costco receive car discounts? A: Costco members have access to exclusive discounts, incentives, and other savings opportunities on automobiles through the Costco Auto Program. The program collaborates with car dealerships and manufacturers to offer these additional benefits to its members.
Q: What role does Costco play in the car selling process? A: Costco itself does not sell cars or recreational vehicles (RVs), nor does it negotiate individual transactions. Instead, all vehicles offered for sale are subject to availability and have a pre-negotiated price with the participating franchised dealer. Dealers pay a participation fee to be part of the Costco Auto Program.
