Is Costco the Best Place to Buy a Car?

Non-Negotiable Savings

Americans don't want to haggle over car prices. According to Autolist, 48% of shoppers say negotiating a price while buying is the worst part of going to the car dealer, and 42% fear getting ripped off. This could help explain why Costco's Auto Program, which arranges no-haggle car-buying discounts for members, is growing in popularity. But is it a good deal, and how does it work? Read on to discover whether Costco is the best place to buy your next set of wheels.

Costco Authorized Dealers — jetcityimage/istockphoto

Costco Auto Is More Popular Than Ever

Buying a car through Costco may seem like an offbeat choice, but the numbers say otherwise. More than 2.3 million Costco members have purchased discounted vehicles through CAP in the past five years. In 2018, more than 650,000 cars were sold through the program, up 25% from 2017.

Shrugging Off Siding — Vividus/istockphoto

You Can Buy RVs or Other Vehicles

The Costco Auto Program isn't just for people who want a shiny new car, truck or SUV. The program extends to RVs, motorcycles, and small vehicles such as ATVs, golf carts, and snowmobiles. You can also lease through the program.

Used Cars Are Fair Game

Costco Auto Program buyers aren't limited to new cars. Factory-certified, pre-owned vehicles made up almost 16% of CAP sales in 2018. These are cars that have undergone dealer inspections and reconditioning to ensure they meet factory standards that come with an extended warranty. Pricing is based either on low- to mid-range Kelley Blue Book values or a set discount based on the dealer's lowest advertised price.

Cheapest Oil Change — spyderskidoo/istockphoto

You Can Save on Parts and Services, Too

While car buying makes up the core of the Costco Auto Program, the warehouse club has also used its clout to wrangle more benefits for members: a 15% discount on automotive parts, services and accessories at participating service centers. A savings cap of $500 applies, and there are some exclusions. CAP received roughly 250,000 member requests for parts and service referrals in 2018, up 68% from 2017, according to program representatives.

Professional Sales People — londoneye/istockphoto

Sales Representatives Are Vetted

There are more than 3,300 participating Costco Auto Program dealers in the United States and Puerto Rico. Costco trains and certifies dealership employees, some of whom may act as representatives for other car-buying programs or serve on a dealer's Internet sales team. These employees are tested occasionally by Costco mystery shoppers to be sure they're following through on discounted pricing and the pledge to provide a good, no-stress buying experience. Dealerships that fall short during a review can be kicked out of the program.

Transparency Is Key

When presented with Costco Auto Program pricing, members can review the vehicle's approximate invoice price (what the dealer allegedly paid the manufacturer) and MSRP (the sticker price the manufacturer suggests). Costco also has a team that compares the CAP discounted prices with dealers' prices to make sure they remain competitive. Additionally, member advocates are available to help with each step of the process.

Costco Can Save You Money on Your Car — Kristi Blokhin/shutterstock

There's No Money in It for Costco

Costco does not make money off the sales; dealers pay a monthly fee to participate in CAP. Costco car representatives have no loyalty to a particular manufacturer or dealer, so they can be trusted as advisers, according to Philip Reed, autos editor at NerdWallet.

Sometimes There Are Special Deals

Buyers are eligible for a variety of manufacturer rebates and incentives, which Costco lists online. The Costco Auto Program also offers limited-time specials on certain cars. For instance, this past summer has featured discounted pricing on Audis — 8% off the MSRP of six new models, an offer that's stackable with other publicly available incentives. The past couple of years have also seen special offers on Subarus and Hondas, and luxury brands like BMW and Volvo. A recent holiday sales promotion offered special pricing on select Chevrolet, Buick, GMC, and Cadillac models.

How It Works

To begin the shopping process, members first go to the Costco Auto Program website, or they may call its customer service line and talk with representatives who can guide them through the process. After selecting a vehicle, members can review information about participating dealerships nearby and the specific employees authorized to offer the program's prearranged pricing. They are not provided a price for a specific vehicle until they visit the dealer.

You Can Use the Price to Negotiate

Costco locks in prices by negotiating on members' behalf, using the size of its customer base as incentive for dealers to come in with their best offers. But shoppers are not required to buy and can use the Costco pricing when bargaining and buying at other dealers. Regardless of how good the deal is, an Auto Program quote gives Costco members a valuable ballpark price point for car shopping.

Make Sure You Can Handle the Down Payment — Kameleon007/istockphoto

The Savings Are Nothing to Sneeze at …

Of course, your member discount through Costco Auto Program will vary depending on factors including location and the make and model you choose. However, on average, using CAP saves buyers about $1,000 off the average transaction price in their local market, according to program representatives.

Haggle for a Better Price — Nastasic/istockphoto

… But Haggling Still Might Get You a Better Price

Reed says he wouldn't recommending joining Costco just for CAP. Even though he has used the service and observed that drivers can get an especially fair price buying vehicles in plentiful supply, he says rock-bottom prices are more likely for those who play hardball. "The Costco program isn't always the lowest price. Shoppers who want to contact multiple dealerships and maybe do a little haggling can possibly get a better price." Redditors echo his thoughts: While many are pleased at the no-hassle feel of the experience, others say they got a better deal by shopping and negotiating the old-fashioned way.

You Have Other No-Haggle Options

Costco isn't alone in offering group-buying discounts on vehicles, so if you don't have a Costco membership and don't want one, there are alternatives. "Shoppers might try a broker, or a car concierge who might charge a fee but will offset it with a better deal," Reed says. He also recommends checking with AAA, banks and credit unions. Another option: The USAA Car Buying Service, reserved for members of the military and their families.

You Can Buy a Car Through Costco — Cheapism

The Price Is Only Half the Battle

Factory add-ons are part of the Costco member price. Participating dealers agree to a minimum savings on any additional accessories or dealer add-ons, and many offer more than the minimum discount. But buyers should note that it's still up to them to get the deal properly financed, negotiate the value of any trade-ins, and navigate the world of add-ons and upsells, which can still add some stress to the shopping experience. "You still have to safely navigate the finance and insurance office," Reed notes. "This means the finance officer will pitch additional products to include with your car. It's a good idea to think this through beforehand so you can make sure you know what you want. Often, these additional products can be purchased later, at a lower price, elsewhere."