“Welcome to Costco, I love you.“
As the movie Idiocracy so perfectly satirizes, you can get damn near anything at a Costco—from giant packs of toilet paper and pallets of peanut butter to cheap hot dogs and soda. But did you know you can also buy a car through Costco?
No, Costco doesn’t have giant car lots hiding inside its warehouses (at least, not that I know of). Instead, the retail giant has an Auto Program that has been around for more than four decades, giving members pretty sweet deals on new and used cars alike.
To learn more about how it works, I spoke with Jay Maxwell, general manager of the Costco Auto Program and a longtime Costco employee. We talked about everything from how Costco selects its dealership partners to the discounts members can get even after they buy a car.
It turns out the program is way bigger than many people probably realize.
Photo by: Costco
Costco Auto Has Two Ways To Save
There are essentially two sides to the Costco Auto Program.
The first is its dealer program, which connects members with participating dealerships that offer prearranged Costco pricing. The second is a series of limited-time incentives that Costco negotiates directly with automakers.
First, for the dealer-based program, Costco works with a select group of dealerships that have to meet certain criteria. It’s not just a matter of a dealer signing up and slapping a Costco sticker on the front door; it’s a stringent process, as Maxwell explains:
‘They have to meet a set of criteria. One, they have to be in the community. Two, they have to have inventory. They have to have good ratings and scores. And they also have to offer very, very competitive Costco-style pricing and offer a Costco member experience.’
That even includes dedicated salespeople within the dealership who are specifically trained to handle Costco customers.
‘It’s not open to everybody in the dealership. It’s a select group of people who are highly skilled salespeople. They know the car business, and they know the Costco program, and they have access to all the Costco information.’
For members, the process is pretty simple. Go to CostcoAuto.com, enter your ZIP code, and pick the vehicle you’re interested in. Costco then connects you with an approved dealer that provides its prearranged price—no haggling required.
‘They can set a referral out to a local dealer, connect with that dealer, and get Costco’s prearranged pricing for a no-hassle, no-haggle experience in getting their new vehicle.’
There is one important catch, though: You can’t simply walk into any dealership, flash your Costco card, and demand the Costco price. As Maxwell notes:
‘[Members are] instructed to go to Costco Auto first because we have to verify that they are a current and active member to unlock this process.’
Makes sense. But the dealer program is only half of the equation.
Costco Also Negotiates Directly With Automakers
The other side of the program works a bit differently. Instead of negotiating pricing with individual dealers, Costco works directly with automakers to come up with limited-time offers exclusively for its members.
That’s how deals like the recent Infiniti promotion come about.
‘We have several different OEM partners. Some of our very long-term partners are the different brands from General Motors and Volvo. We have some new partners that just joined us this year: Infiniti and Volkswagen.’
These offers typically run for 60 to 90 days and apply to specific vehicles. Costco has also started offering tiered incentives, with Executive members sometimes getting a bigger discount than Gold Star or Business members. As Maxwell notes:
‘On the Infiniti, it’s $1,000 if you’re a Gold Star, and $1,250 if you’re an Executive.’
But here’s where it gets interesting: Members aren’t limited to just one Costco deal.
Infiniti QX60 Autobiography
Photo by: Infiniti
Depending on the vehicle and offer, the Costco member-only incentive can be combined with other manufacturer incentives, as well as the prearranged pricing available through a participating Costco dealer.
‘So if a brand says, ‘Hey, it’s end of summer, here’s another $1,000’… Costco is stackable with that offer as well. So you could go into that dealer, get your Costco savings, apply the street rebate, and then apply the Costco rebate on top of it.’
Maxwell jokingly described it as “triple dipping.”
In the case of Infiniti, for example, Costco Executive members can get up to $1,250 through the current promotion (assuming they’ve been Executive members for a specific timeframe). If there’s also a Costco-participating dealer offering prearranged pricing and Infiniti is running another qualifying incentive, those savings could be combined.
Costco’s direct manufacturer program is a bit more seamless for consumers, too, allowing them to pick any local dealership they want—not just the ones already on Costco’s approved list. As Maxwell describes:
‘Again, you go to Costcoauto.com and register for the offer. You get a PIN code, and then that PIN code is what you present to the dealer. And it’s a dealer of your choice. You can go anywhere you want, and you would give that to the dealer, and they would apply it to your purchase.’
It’s Not Just New Cars, Either
New cars may be the biggest part of Costco Auto, but they’re not the only option.
The company’s Select Pre-Owned program focuses on higher-quality used vehicles. The used cars in question must either be manufacturer-certified or meet certain remaining factory-warranty requirements. According to Maxwell, Costco is deliberately selective about the cars that make it into the program.
Between its new and used program, Maxwell says that around 1.4 million people use the Auto Program every year—which is a relative drop in the bucket given the roughly 147 million Costco members worldwide. Over the past five years alone, Costco members have purchased more than 3 million vehicles through it.
That’s a lot of cars… but still not as many as the more than 245 million hot dogs the company sold last year alone.
Photo by: Costco
It Doesn’t End When You Buy the Car
Once you finally drive off the lot in your hopefully heavily discounted new vehicle, the Costco experience doesn’t necessarily end there.
Most people already know about Costco’s cheap gas and affordable tires, but the company also offers members major discounts on parts, service, and accessories. Members can get 15 percent off services and accessories at approved service centers.
And Maxwell says that, more than anything, that side of the business has grown significantly.
‘We have seen, over the last couple of years, tremendous growth in our parts and service program as well… The average age of the fleet in the US is now approaching 12 years old, and in some segments, it’s getting even a little bit older than that. So they have to maintain them somewhere.’
Costco is also paying attention to what members actually want to buy.
‘One of the things that we see a lot of is members have a high degree of interest in hybrids. They also still have a good interest in EVs, even though the industry is changing a little bit.’
It’s easy to think of the Costco Auto Program as an easy way to knock a few hundred bucks off the price of a new car. And largely it is. But Costco can also help you research a vehicle, buy accessories, maintain your car, and, of course, give you somewhere to fill it up afterward.
As Maxwell puts it:
‘You can basically start at Costco, get your car, do the warranty, accessories, and then you go get gas, and you can get everything.’
Costco has spent nearly four decades building a system around making things easier to buy. And if Idiocracy has taught us anything, it’s that Costco really does have a little bit of everything—including cars.
