Costco Auto Buying Program: Scam or Good Deal?

costcoauto

I’m paranoid about getting scammed.

It’s almost to the point where I don’t even want to answer the phone out of fear I’ll accidentally blurt out my social security number to someone claiming to work at my bank.

When it comes to car buying, my guard goes up like I’m a schizophrenic at a CIA interrogation. 

That’s why I was intrigued when I discovered an auto buying program at Costco. The company’s website claims Costco saves members a lot of hassle and an average of $1,000 off a typical transaction price. It works like this:

Members choose the make and model they’re interested in, then Costco refers them to a local dealer who shows the customer the vehicle’s invoice price, the MSRP, and the Costco no-haggle price.

A no-haggle price with built-in savings sounds pretty good on the surface, but still my paranoia wasn’t eased by browsing Costco’s website. Digging a little deeper online, I found a lawsuit filed in January by a New Jersey woman who says the program is deceptive.

Her main accusation, according the paperwork, is: 

The Costco auto program is misleading and deceptive because its “members only” price is exclusively defined in reference to the “invoice price” of authorized dealers. The Costco auto program does not control the underlying invoice price, and its participating dealers can and do manipulate that price in any number of ways.

A-ha! I knew there had to be something. Everyone knows dealers try to squeeze every ounce of cash they can out of people, so if there’s a price they’ll immediately accept, they must have a good amount of profit built in. Still, I trust Costco….

So I decided to put its auto buying program to the test.

While I was shopping to replace my wife’s car a few weeks back, we looked at getting a 2009 Honda CR-V EX AWD. It was black with a window sticker price of $25,635. We got pretty far into the negotiations before they broke down over the value of our trade-in. The purchase price we arrived at: $23,600.

With this in mind, I contacted the Costco Auto Program with no intent of buying, but to research this story. I wanted to see how close their offer was to the price I negotiated myself. I filled out the online form and waited 24 hours. They never called. So I called the “specially trained” Costco-approved salesman I was referred to and asked what my price would be.

He asked me to come in and see the car. I told him I’d seen it already and just wanted to know the Costco price. I eventually convinced him I wouldn’t come in unless I knew the price was acceptable. 

Then he told me: $23,900.

I admit, I was impressed. I came  to the conclusion that programs like Costco’s just might be worth it if you’re the kind of person who cowers at confrontation and despises negotiation. The deal, at least in this case, wasn’t too bad!

If you’re a negotiation pit bull, though, go after ‘em, and take every hundred you can get!

Would you consider, or have you used, something like Costco’s auto buying program?

-tgriffith

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    1. Renae
      July 26th, 2016 at 13:10 | #1

      Costco Auto Program is a big waste of time.

      They have me going all over San Diego to visit dealerships that don’t honor the Costco Auto Program Pricing and dealerships that don’t have the cars they have listed on the Costco Website. I called into the Auto Program and the Reps were unhelpful and rude.

      I do not recommend the Costco Auto Program.

    2. Michael V
      July 19th, 2016 at 16:33 | #2

      I am bit skeptical of the Costco program. They work for the local dealers in your area, and don’t necessarily have your best interests in mind. I am an Auto Broker, I have been able to beat almost every Costco price that has been put in front of me. Good Auto Brokers focus on only the best price possible, not enough just enough to catch your interest.

    3. susan sher
      June 7th, 2016 at 05:55 | #3

      I couldn’t wait to purchase a car through the Costco Auto Program. Unfortunately the only Kia Dealership that participated in their program (near my location) turned out to be a dishonest and deceptive.. Purchasing a vehicle from YONKERS KIA has been one of the worst experiences ever. They’re buying incentives were fraudulent and misleading.
      Typical bait and switch practices. Costco should be more careful of who their participating car dealers are. Make sure you read all dealer reviews before using the Costco auto program.

    4. Roach
      June 1st, 2016 at 17:17 | #4

      We tried the Costco car buying system but the dealer was cagey on the actual invoice amount and also tried to leave out a factory $500 cash back offer. In the end, we had to resort to old fashioned car price negotiations just like always. For our next car we’ll check TrueCar and Kelley Blue Book for a good price and negotiate for ourselves.

    5. Frank
      June 1st, 2016 at 01:12 | #5

      @ Costco Auto Program
      Hi, @costcoautoprogram!
      I just had a dealer referred to me by costco tell me the car I wanted isn’t part of the program. What? It was on the Costco list online… What to do?

    6. Christine M
      May 9th, 2016 at 16:24 | #6

      Hello, we filled out the online Costco deal and was contacted by the San Tan Hyundai dealership in Chandler, AZ. We were looking for a certified used car. We were there 5 hours. we told them the amount we could spend monthly and they kept trying to put us in a lease for a new car and never mentioning the Costco deal. finally we pursued a used car and got a pretty good offer for a used 2013 sonata. The paperwork was done and I was asking what about Costco deal? Sales person said oh well this is a better offer. She stated it would be $500 under a published price (which none was published for this car). After comparing to other dealerships, the cost we paid is close to what other dealerships would charge, but I went away from that experience wondering about the Costco deal.

    7. Wilson Guindin
      April 26th, 2016 at 17:33 | #7

      I tried using the costco buying program at their recommended Toyota dealer in Puerto Rico. I worked backwards i got their quote and final price then i went to different toyota dealers. I negotiated a better deal at two out of three toyota dealers in the area and i went back to the costco preferred dealer and they declined to lower the price. The tag and title was $250 more than other dealers and the extra add ons i wanted were $500 over. Don’t fall for this scam .

    8. Cathy Catero
      April 16th, 2016 at 15:13 | #8

      I upgraded my Costco membership to executive to get the car buying option. I had been working with a dealership but I wanted to best deal. I had a quote from San Tan Honda.. Costco sent me to Superstition Honda. The amount from Superstition Honda was higher. Showed me the invoice and the Costco agreement but what they aren’t telling you is that everything is a add on. I showed the quote from San Tan Honda and Superstition Honda matched with accessories but they were not happy. I bought the car from Superstition Honda as they had what I wanted in stock but wish I had dealt with San Tan as they were honest and w/o their quote I wouldn’t have gotten the best deal. Costco called to survey me on how the car buying experience went. Costco rep said they were sending me a coupon % off to use to buy accessories but that has never materialized. I upgraded my membership, paid Costco the difference to use the car buying but would recommend anyone looking to buy a car to compare dealerships or check online to know the cost from other dealerships so not to get taken. Costco isn’t always the best deal.

    9. John W
      April 13th, 2016 at 08:52 | #9

      @ John W

      Forgot to mention we still did NOT buy the vehicle from Elgin Toyota. We felt that since they were snaky about the Costco program and tried the old dealer trick of tying you up for hours to break down your conviction, we couldn’t trust them and they didn’t deserve our business. Same with Grossinger Toyota and Arlington Toyota in the Chicago area. We DID buy from Naperville Toyota, they were far from home but very good to deal with. We felt respected in the transaction and that our business was appreciated. We still do to this day.

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