To rephrase a quote from President John F. Kennedy, ask not what you can buy from Costco — ask what you can’t buy.
But what about buying a car? Should you make use of the Costco car-buying program?
Costco Car Buying Program: What Are the Pros and Cons?
Should I buy my next vehicle through my Costco membership?
That’s what a listener recently asked Clark.
Asked Sandra in California: “Do you recommend I arrange a car purchase through the Costo Auto Program? Please elaborate on the pros and cons.”
In case you’re not familiar, a car-buying service can help you avoid the hassle of visiting dealerships and negotiating prices. Instead, representatives shop for a vehicle on your behalf.
If you find a car you like, the representative will connect you to a dealership, which often gets you competitive pricing.
“The Costco car-buying program is just about the best car-buying program in the United States,” Clark says. “Because Costco has this very large membership base I think of 60 million Americans. And they’re significantly more affluent on average.”
More affluent people tend to buy new cars. So dealerships need Costco customers, Clark says.
“Costco only appoints one dealer of each brand in each metro area. So that dealer has to live by Costco’s code of ethics. They are not allowed to play games or they get booted to the curb and they’re replaced,” Clark says. “So the Costco program is really clean.
“The manufacturers also know especially for higher-end vehicles that Costco is a big conduit for buyers. So the manufacturers will offer special deals to Costco buyers that are not available elsewhere.”
Costco Maintains Standards for Its Car-Buying Program Dealership Partners
There’s a pop culture saying that “snitches get stitches.” But in this case, snitching is encouraged if you aren’t treated well. Costco is a stringent gatekeeper of the dealerships with which it works.
“If you ever go to buy a car through the Costco car-buying program and they don’t treat you right at that dealership, you report them immediately,” Clark says. “You rat them out to Costco’s auto-buying program.
“And they get enough complaints about a dealer, I’m telling you, that dealer, it doesn’t matter how much volume they’re moving, they’re out of the program. So it is a true consumer-oriented program.”
What Are the Cons of the Costco Car-Buying Program?
All that sounds great. But there have to be at least some downsides to the Costco car-buying program. At least for some people. Right?
The program isn’t designed for people looking to score the best possible deal on a specific vehicle, Clark says. People willing to travel and expand their search can often find better deals.
“[Costco’s program] is designed for you to buy local,” Clark says. “And often if you’re a really good shopper and you’ll shop a wide geographical area. Let’s say up to 500 miles from where you live, 1,000, 2,000, anywhere in the country.
“You’ll get a lower price if you shop geographically wide for a car. The Costco program makes it easy and gets you a good price on a vehicle. Not necessarily the absolute lowest you could get.”
Clark calls the Costco car-buying program possibly the best in the United States. You should work with a vetted dealership that’s incentivized to woo you as a customer.
However, if you expand your car search beyond your local city, you can probably find a better price on a vehicle.