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

Find Used Cars in Your Area at CarGurus

Be Sociable, Share!

  1. April
    February 6th, 2016 at 12:26 | #1

    Hi everyone. My son and I are just starting the car hunt. We have requested many quotes from Costco as you are required to pick the exact make and model. I did learn that with the Costco program they may not be able to offer a lower price as it is a no haggle program. On the up side we are able to combine the Costco program with the 3500 incentive and the Honda interest rate of 1.99. Without the Costco program we would have to choose one or the other, 3500 or the low rate. That being said it was a phone conversation. We will see what really happens. We are torn between the Corolla as it is a 0.0% rate and the Honda EX-T (turbo) as this is a commuter car.

  2. mo sat
    January 29th, 2016 at 10:14 | #2

    Costco Auto program is worse that worthless. Crappy dealer now plaques me with email, Phillips Chevy Frankfort IL. Save $1000 on a $40,000 car is not why i pay membership at Costco.
    This program is a fraud.

  3. Roscoe
    January 20th, 2016 at 22:16 | #3

    In our case Costco did not provide anything close to an “exceptional auto buying experience”. We arrived at the dealership with 20% down payment and a trade only to end up with a zero equity position in the vehicle after the F&I manager hid a bunch of extended warranties in the payment.
    Never again with Costco. Our previous buying experience was through a Credit Union program which made sure that we were not in an untenable position financially at the conclusion of the transaction since they provided the loan.

  4. Les Vivian
    December 30th, 2015 at 13:40 | #4

    I highly recommend that all car buyers try the COSTCO service. Her’s my story: I am a sure negotiator. I have sold cars. I used to use AARP or Edmunds or Trucar to get my best deals. This year I used Costco Auto buying service and got a much better deal. The program is based on going to the showroom and meeting with the Costco trained rep. The reviewer didn’t follow the procedures. Once in the showroom they show you two pieces of paper. The dealer “invoice” which they keep and your COSTCO cost which is yours to keep. They don’t try to coerce you to buy that day and you are free to leave. No Hassles. (Contact COSTCO if they don’t treat you properly!) After I go

  5. diane
    December 29th, 2015 at 18:04 | #5

    The closest dealer to me who is on the costco auto program is a 40 minutes drive. They were impossible to get a price out of on the phone. I was tough, yet polite, about not coming without knowing their “negotiated price” but didn’t get anywhere. Thinking it’s got to be worth my while I went down and was very disappointed. I then went elsewhere near my home and negotiated $2900 less then the Costco price!
    I am again shopping for another car. Costco is sending that one and only dealer to me but I won’t bother.

  6. NoName
    December 22nd, 2015 at 15:08 | #6

    Because I’m not fond of haggling, I emailed both AAA (Auto Club) and Costco for membership specials. Both sent me to Norm Reeves Honda in Irvine, CA. The Costco price was many times better than the AAA referral price. I bought the vehicle this past summer for the price I had budgeted from my internet research. Plus, Costco included additional discounts. I could not be happier with both Costco and the dealership.

    I was disappointed by the AAA discount dealer’s price. If I remember correctly, there was about a $750 to $1,000 additional savings with Costco.

    Despite the route of least resistance I took, reading, understanding and signing the paperwork still took about 4 hours – maybe, it just seemed like 4 hours.

  7. Dave
    December 7th, 2015 at 21:40 | #7

    This program sucks. The first dealership I dealt with told me the nearest car was in Missouri – over 8 hours away. I found a car in Indiana, but the “special Costco price” was higher than the price they advertised. I’m done.

  8. Scott
    December 4th, 2015 at 13:22 | #8

    December 3, 2015. I had two awful experiences at car dealerships that were Costco Authorized. Earnhardt Toyota in Avondale Az and Arrowhead Toyota in Peoria AZ. Let me just start off by saying I wasn’t expecting the greatest price ever, but I was expecting the types of savings I have come to expect when I shop at Costco. I went on the Costco Auto website and put in my info and was given the name of a local Honda dealership. I called the Costco auto buying dept up and asked if their was another Honda dealership closer to my work and they resent my information to another dealership. My evening started off with deception and high pressure sales tactics and ended up the same way. The sales/pricing managers at both places forged (i.e. created from scratch and put them on a piece of paper that they titled Costco Pricing” their prices and provided me estimates that were just a few hundred dollars off of MSRP (not Factory Invoice) on 2016 Honda Civic LX models with the additional Honda Sensing upgrade. I took pictures of the printouts from both of these dealerships when these people left the room. Online prices for the exact same cars just down the road at another Honda dealership (non Costco) were starting at around 2-2.5K below MSRP or within $100 above or below of Factor Invoice pricing for the new 2016 Civics. I contacted the COSTCO auto buying team about both incidents and then emailed them the pictures I took and screen shots of the local prices I found online from those other Honda dealers. Haven’t heard back from the Costco autobuying team yet. Something else of note was that when I was in the car with the first sales person (who wasn’t directly part of the Honda Costco program) he even said the price was going to be just under factory invoice and looked shocked when his sales manager brought out my “special Costco Pricing” which was quite possibly the highest price anyone had ever been quoted who wasn’t on a waiting list for a brand new model. I drove down to the 2nd dealership, which was the original Honda dealership Costco had sent my information to, the same night because I was so upset about my first Costco buying experience to see what their price was. I chose not to inform the people at Earnhardt Honda that I had just came from the Arrowhead Honda or what the price I had been given. I was still trying to give the entire Costco Auto Buying experience the benefit of the doubt. I love, love, love Costco 99.99% of the time…. until now. The whole point of the Costco buying experience, according to Costco’s auto buying website is that it is a “PREARRANGED PRICING AND AN EXCEPTIONAL AUTO BUYING EXPERIENCE.” By the way, the 2nd Honda dealership Earnhardt quoted me an extra $600 below what the Arrowhead Honda had, but informed me that this special pricing was part of a package deal and I would need to buy around $2300 worth of dealer added items to my car (e.g., tinting, something called auto caddy, nitrogen in my tires, clear plastic door guards, dealer installed alarm, etc). I don’t want to sound like i’m advertising for the other Honda dealership, but do yourself a favor and pull up all the local online Honda websites until you find one that has actually discounted prices for all their models displayed or try using Autotrader or Carguru online. I’ve decided that anytime the dealer website says I have to call or come in for special pricing it’s a bad deal unless I was planning on pitting dealer against dealer and haggling all day anyways. I’m going to post this comment in a few places and see if I am able to upload the pictures I took as well. p.s. I don’t blame the actual salesmen who showed me the cars. In both places they were actually very helpful and knowledgeable. Although I have most been meeting the awful type when I have gone to different dealerships just to look at new competing cars from other Manufacturers in the price range I am in.

  9. harry
    November 30th, 2015 at 15:10 | #9

    @ Tnerb
    did you use costco program to buy pilot (since dealer is not going down from MSRP due to very low supply)? I tried many dealers they are not going below MSRP. Now I decided to use costco program, if it can low MSRP for Pilot.

  10. Sean
    November 25th, 2015 at 22:39 | #10

    I am surprised at the number of negative responses that I see posted here regarding the Costco Auto Program. It would appear that whether it is a bargain or a scam, greatly depend on the dealer and how well it stays within the rules of the program?

    My wife and I just purchased a 2016 Subaru Forester 3 weeks ago using the Costco program. We were originally looking at Certified Used, but with the Costco Auto Program, we were able to buy a new vehicle for around the same price as a 2014 Certified used. The Costco deal for the new car was about $3200 off the sticker price using the Costco Auto Program. Could we have done better than that had we fought tooth and nail? Perhaps, but there is something to be said for the no-haggle approach as well and our time is money also.

    I have to say it was the most pleasant car buying experience that either of us had ever had. I dare say it was almost fun? The salesman called and asked us which car we were interested in, color, options, etc. He checked his inventory and had one that matched our requirements. When we arrived the car was detailed and ready to go. He asked if we would like to take a test drive of our specific car. We declined having already test driven a couple of them during the process. We then proceeded to fill out the credit app, met briefly with the finance guy to sign paper work, salesman went over our manual and the car itself, feature by feature and sent us on our way. There was no haggling once we were there, no up-selling, no trying to change the deal after the fact. Just very straight forward and simple. Not the slightest bit of anything that even vaguely smacked of scam. Straightforward and pleasant.

    A day or two later I received a survey from Costco regarding the Costco Auto Program. Filling it out resulted in a coupon worth 50% parts, accessories and service up to a $200 discount. I took advantage of this to add body side moldings and front and rear bumper guards, which resulted in the full $200 discount.

    You can also get subsequent coupons from Costo Auto Program for 15% off parts, service and accessories. I am not if you need to buy a car or just be a Costco member for that. I think the later since it “Applies to any existing vehicle in your household,” but maybe it only applies to other vehicles if you buy at least 1 new one through the program? I don’t know on this aspect.

    Anyway, I guess it comes down to the dealerships and maybe the brand of car you buy? But our experience I would rate a 5/5 star.

  11. Tnerb
    November 12th, 2015 at 15:25 | #11

    The 2016 Honda Pilot has limited production and inventory. However, I was able to get a price very close to Invoice. I am going to reject dealer accessories (MARGIN generators) and focus also on getting a good deal on my trade. too bad the dealer is WAY TOO FAR from my house…. Trying to work out a delivery.

  12. dan
    November 6th, 2015 at 22:47 | #12

    @ Juvernia
    as long as there are laws that prevent me from buying a car online and having it delivered to my home- and forcing me to go to a dealer- I will say that your comments are obviously false. When that sort of body of law exists around hamburgers you may have a point. geesh you are dishonest.

  13. dan
    November 6th, 2015 at 22:44 | #13

    @ Tim
    yes the fleet guy does not do the pressure (duh) the “warranty guy” does. Have you ever bought a new car?

  14. dan
    November 6th, 2015 at 22:43 | #14

    They still double teamed me and high pressured me big time. I had to get Costco on the phone- then the manager gave me a lower price, Well, why did they not give me the better price in the first place? and why did they double team me and do the dirty car dealer tricks?!?

  15. Tim
    November 6th, 2015 at 12:19 | #15

    Just an FYI – I see a lot of people saying they’re hassled, pressured or given bad deals…

    You cant NOT speak to just any sales person. Typically it’s the fleet salesperson that handles Costco sales. Make sure you set up the appointment with Costco website/number and only talk to that one person. If you’re not being treated correctly just walk away. Pretty simple.

  16. Sharon
    October 31st, 2015 at 20:17 | #16

    At Chevy/ GMC dealer today looking at a new car. They asked us, as they did everyone who came, if they were Costco members. Found the car we wanted… shown the “Costco price” …which was very good!. Halfway through the deal…. Sales manager came out and said the car we were interested in was not on Costco’s list and we would have to RE-start negotiations. THEN…. the dealer kept adding back in more and more money… including an $800 fee (that had not been mentioned before) for bringing the car we wanted from another lot. The MSRP was $42,000 (Costco price was $38,500) By the time they finished adding in all their extras… that figure magically jumped from $42K up to $49K,….no discounts or incentives . Plus on our trade-in they offered us $7500 on a car that had a low trade in of $12K WTH????? Hmmmmm….does make me wonder if Costco encourages dealers to play this game, or is this something the dealers have come up with on their own.

  17. Ricky
    October 15th, 2015 at 16:40 | #17

    I just got off the phone with an “Authorized Dealer” and he stated that Costco did not have a buying program for the Honda Pilot. He said they were selling for the MSRP and nothing less.

    Waste of time in my opinion.

  18. Anita
    October 11th, 2015 at 10:50 | #18

    We bought a 2015 jeep in February and we saved 3500.00 for being a costco executive member. Yesterday we bought a 2015 GMC Sierra we saved 3000.00 and we are receiving a 700.00 cash card from the costco auto program . This is not a scam! The way to do this is to get pre authorized by calling the 1 800 800 5778. They will give you a list of dealers that participate . Not all makes and models are in the program. Being a EXECUTIVE member really does pay for itself. Don’t just go gold star go for EXEUTIVE. Very happy COSTCO member.

  19. Juvernia
    September 29th, 2015 at 12:52 | #19

    As referred to by Patti in a previous comment, I am one of the “slimeballs” that sell cars. You are correct in an effort to stay in business, dealerships will attempt to make a profit. I will be honest enough to say that a lot of the tactics can be reprehensible but no one complains about paying $5 for a Whopper with cheese (no drink, no fries). Or when you purchase a mattress for $800 which could be as much as 60% above retail. With that being said there are many of trying to provide a service in a respectable manner. The reason people feel the way they do is because many don’t know much about the car they are buying or have anything that they can compare to know they are getting a good deal. using the Costco service will allow you to get a good deal without having to fight for every dollar.

  20. Rexy
    September 28th, 2015 at 12:19 | #20

    Do your own negotiating. I used the costco auto program to set up two dealer visits in search of a mid size sedan with an MSRP of $26,100. The first dealer gave me a $1,200 discount off the MSRP, which I thought was a joke. The second dealer gave me a $2,600 discount off the MSRP, which I thought was OK.
    Then, I went to a third dealer on my own (not in the costco auto program) for the same car/same options. I did let the salesman know that I had been shopping though the costco program and their first offer was very close to the $2,600 off. After about 90 minutes of back and forth negotiations, I bought the car at $5,000 off the MSRP. And, they added 5 years of free oil changes.
    Do your homework and play their game. They really, really want you to buy their car. Use their motivation against them and to your advantage. And, let them know you are willing to go to another dealer to see their offer.

  21. Patti
    August 16th, 2015 at 19:38 | #21

    I’m glad I saw these comments! In Hawaii the salesmen just the same as on the mainland. Is that a prerequisite to becoming a car salesperson? Devious and scheming and like the person above described them as slime balls?

  22. Phil Conkling
    August 4th, 2015 at 00:47 | #22

    Please keep in mind that neither Costco nor any of the other buying services seek to limit the out-the-door price or financing terms only the so-called “price.” Dealers can and do raise fees and/or undervalue your trade-in to cover whatever incremental discount Costco requires on the car itself.
    Use the Costco program price as a starting point for the car element of the deal. But then make sure you get multiple out-the-door prices that include trade-ins and/or down payments, all fees and taxes, and all financing options, including dealer financing, straight cash purchases, and lease.
    Generally speaking, the discount of the Costco price off MSRP will be magically erased by the dealer via higher ‘processing’ fees, lower trade in values, higher finance rates or higher front- and back-end fees on a lease.

  23. Rocco Lugere
    August 2nd, 2015 at 10:12 | #23

    @ Mike
    Spoken like a true car salesman . While Im at it you can go fuck yourself, this forum is for people to discuss their expericence with the Costco program not for some slimball dealer to vent.

  24. Boris
    June 30th, 2015 at 22:37 | #24

    The Costco Auto Program is not worth to try it. I called Costco to be assisted in buying Toyota Highlander 2015. A Costco so called “highly trained” representative sent me to a dealer who told me that this particular was excluded. Later on I found out that Costco was awere of it but sent me anyway. I guess they making money just have you go to a dealer. Do not waist your time. Very disapointed

  25. June 11th, 2015 at 07:42 | #25

    The discount above (personally negotiated is 7.9 percent off MSRP. Costco’s was 6.8 percent. Now, small SUV can be pretty good sellers. My daughter just bought one (Toyota) with a 18.2 percent discount off MSRP. Her first car buying experience. Now I gave her my 2 cents worth so she had some preparation. I don’t consider upwards of 8 percent discount too shabby a discount, but…you judge.

  26. Jim
    June 10th, 2015 at 19:19 | #26

    The Costco auto program is a border line scam. They show you “Costco” prices that are lower than Msrp but the problem is that all those numbers are artificially inflated to begin with. I walked into a deal with Costco program and actually still ended up haggling with them and got the price down even lower than the Costco price. If I had just walked in with my Costco price I would have still over paid. I mean come on, why would the dealer be in it if they weren’t making money with this Costco deal.

  27. Patrick
    June 9th, 2015 at 18:09 | #27

    I bought a car through the Costco auto program and it was the worst buying experience EVER! I am extremely disappointed that Costco referred me to these slime balls . The Costco brochure said, NO pressure, stress free buying experience…

    Well, it wasn’t like that at all. The dealership they referred me to hustled me into a six year financial mistake.

  28. john
    May 20th, 2015 at 16:56 | #28

    @ Linda
    Costco is awesome. You had a bad experience with one vendor, get over it. Ameriprise is actually a fairly reputable company. Liberty Mutual coverage forms are not good. You probably don’t know what you’re getting.

  29. Linda
    May 6th, 2015 at 15:57 | #29

    Costco’s Ameriprise insurance are the biggest scam artists I ever dealt with. Had Liberty Mutual for years and they quoted me a lower cost and I accepted. After making payments for 2 months on a 6 month policy they called me and said THEY made a mistake and were raising my premiums tto OVER what I was paying with Liberty Mutual. Bait and Switch and I will continue to complain. These people need to be put out of business. I cancelled and went back to Liberty Mutual and they STILL tried to remove money they were not owed from my bank account. THEY ARE CROOKS!! I will NOT be renewing my Costco membership and advised my restaurant owning son , other family and friends to cancel their Costco memberships – they are a rip off anyhow.

  30. John
    April 16th, 2015 at 10:23 | #30

    We went through the Costco buying experience and saved $2100 over the True Car website price and $1100 from another dealer we walked into. We were looking at the 2015 CR-V EX-L. The first price the Costco dealer gave us wasn’t as low as the lowest we found but he “went back” and came out with the $1100 under our lowest so we took it. The lesson is to to find your best price before you go to the Costco dealer and keep asking for a lower price until you are satisfied.

  31. Jason
    April 14th, 2015 at 12:16 | #31

    Call costco. They will intervene up to pulling that dealer out of the program. They really fight for their customers. They did for me. @ Ron Pennock

Comment pages
  1. June 9th, 2015 at 04:00 | #1
  2. February 2nd, 2016 at 16:35 | #2