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. Phil Conkling
    August 4th, 2015 at 00:47 | #1

    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.

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

    @ 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.

  3. Boris
    June 30th, 2015 at 22:37 | #3

    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

  4. June 11th, 2015 at 07:42 | #4

    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.

  5. Jim
    June 10th, 2015 at 19:19 | #5

    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.

  6. Patrick
    June 9th, 2015 at 18:09 | #6

    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.

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