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

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    216 Comments

    1. We are deeply disapointed in the Costco Auto Buying Program. In all honesty,..it is Usless, Wastefull of Time and SHAMEFULL THAT COSTCO DOES BUSINESS THIS WAY!!!

      – I will NEVER RECOMEND ANYONE TRY THE Costco Auto Buying Program.

      – The nearest Toyota (Costco Authorized) dealership to Deleware, Ohio is about 145 miles away in Cincinnati, Ohio…(Beechmont Toyota) “Save With Dave” (David Roth – Fleet Manager) WHAT A SAD JOKE!!!

      – When talking on phone with dealership, they refuse to provide to you a Costco price sheet. They only give to you what they represent as their factory invoice.

      – When you ask to find out/figure out the payment,…they insist that they are not allowed to do that over the phone. You have to drive the 145 miles to ask them face to face.

      – When you get there, they tell you that they will only sell the car to you for $100 less than their invoce…(NOT DEALER COST).

      So you end up spending half your day, driving nearly 300 miles and spending 30’smthing dollars in fuel…(for what,…$100 dollars?!??!!!)

      Oh yeah,…you get down there and they dont have the car in stock (Forgot to mention that to me before I drove all that way/WASTED MY TIME),…and that since they do not have the car in stock,…they dont have the actual invoice for the car. AND SINCE THEY DONT HAVE THE ACTUAL INVOCE,…then they cant show you the “Costco price sheet” for the car. WHAT A SCAM!!!

      Once they come up with the pricing (Your SPECIAL COSTCO Pricing),…its nearly $80 MORE per month than the deal we had arranged down in Columbus, Ohio!!!

      Stait Up – Point Blank,… The “Costco Auto Buying Program” is as sleezy, if not sleezier than its “Costco Authorized Dealers”.

      Completely Worthless WASTE OF TIME AND MONEY!!!!!!!!!!!!!!!!!!!!!!

    2. We are in the process of choosing a new Hyundai and I have been gathering current prices although we will not be actually making a deal for almost 4 months when our current lease expires. The local dealer sales rep asked if we were COSTCO members and showed me a current list of hard COSTCO discounts by model and year. We were eligible for flat $500 off on top of the laundry list of other running discounts.

    3. I found the car I liked at a local Kalamazoo, MI dealership and called the Costco auto program number and registered. I got a call from the Costco authorized dealer in Elkhart, Indiana some sixty miles away in another state! So much for their membership buyer program, it was absolutely worthless! I would have traveled to a neighboring city with a dealership, but not sixty miles. Their program is an insult to members who pay a premium to obtain their membership.

    4. Have gone through this program. Not found it worthy. You can get better price if you shop around. The really bad experience was at the end of the deals when I added accessories. They charged me over the price quoted by them and when I asked the dealership about the discount then he emailed me that they have alredy discounted the price and not included in the bill. They raised 30% over the bill and emailed back that this is the discount you get. At the end they charged me more then the price quoted even after giving the discount.

    5. I went to a Keith Pearson dealer in Orange park Florida and was dismayed by one of the sales manager tactics who wants to charge with more using the MSRP posted in the car($40,000 +) and not the actual price range showing in the COSTCO site. Even mentioned that the CEO of COSTCO is the one who negotiate the savings i’m supposed to get. I left and bought a car from another dealer.

    6. 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.

    7. 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.

    8. 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.

    9. 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.

    10. @ 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?

    11. 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.

    12. 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 .

    13. 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.

    14. @ 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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