Along with 45.1 million other Americans, you're a Costco member and live a Costco lifestyle. You sleep between the warehouse club's Kirkland Signature–brand sheets, you serve Kirkland wine at dinner, and you cover your curves in Kirkland jeans. So of course you'll want to buy your next new car at Costco, too. Well, sort of.
Promoted with vehicles placed near the entrances of nearly all its 449 warehouse stores in the United States and Puerto Rico, the Costco Auto Program (CAP) doesn't allow you to drive away from Costco with a car. Franchise laws still guarantee that nearly all retail new-vehicle purchases must go through dealers; Costco can't make direct sales. Instead, the CAP is a buying program that connects Costco members with dealerships promising to sell specific cars at specific prices.
Established in 1989, the CAP has counted more than 1 million sales over just the last five years. But it's not alone; buying services are also available through auto clubs, credit unions, and other organizations. About 1500 such "affinity groups," including the USAA, many AAA clubs, American Express, and Consumer Reports, offer vehicle-buying services like Costco's, funneling buyers through a network maintained by TrueCar Inc. TrueCar also operates the TrueCar.com website and Auto Lease Guide, which determines residual values.
While the services may vary in detail, they all operate similarly: Affiliated dealers pay the service a marketing fee or, in Costco's case, a set amount each month, which varies dealer to dealer. For TrueCar, its fee is levied for each car sold, usually $299 for new cars. The dealers are basically paying to leverage Costco, AAA, and other entities to help lure more buyers. In turn, the dealers offer set discounted prices to those clients. That effectively eliminates the nerve-racking negotiations over price that many buyers dread.
But while a buying-service price is good, it's rarely the rock-bottom figure for which a dealer will sell that car. Those prices are still the product of thorough research, shopping around, and hard-nosed negotiation. Also, these services typically don't deal with trade-in values or financing and usually aren't much use when it comes to determining exactly which new car or truck is best for a buyer. It can also be a hassle if the dealer to which the service refers a buyer isn't local or is otherwise inconveniently located.
Buying a commodity product such as a Toyota Camry, Honda Pilot, or Mercedes-Benz C250—cars that dealers stack like cordwood—will be pretty straightforward through Costco. But it's problematic for more limited-production vehicles. If you want an oddly optioned or a highly sought-after car, such as a 2014 Corvette, the dealer isn't likely to offer you much of a deal.
For anyone rattled by the buying process, the relative ease of Costco's program takes out the shakes. It's a solid deal that comes with some peace of mind. Even guys who chew through dealership salesmen for sport may find the Costco price a good tool for starting negotiations. After all, information is power, and there's no such thing as being too powerful when it comes to getting a deal.
What We Said: "'Too much money' is not in a car dealer's vocabulary." Showroom Turncoat Comes Clean, May 2006
from Car and Driver Blog http://blog.caranddriver.com
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