After successfully navigating the car buying process and securing a great deal on my recent vehicle purchase through independent negotiation, I encountered a flyer for the Costco car buying program during a routine shopping trip. Costco’s auto program promotes itself as a straightforward path to good prices and a hassle-free car buying experience, leveraging their established relationships with dealerships. Like many, I’ve often wondered about the real value proposition of such services, specifically how competitive their pricing truly is. To satisfy my curiosity regarding the Costco car buying program and its pricing structure in 2016, I reached out to my car dealer to gain some insights.
My dealer initially hesitated to disclose specifics about Costco’s pricing. However, with a bit of persistence, I managed to get some answers. My core question was direct and to the point: If I had utilized the Costco car buying program for the exact car I just purchased, would the final price have been higher, lower, or equivalent to what I ultimately paid through my own negotiation efforts?
Here’s the response I received: “The Forester you recently purchased would have been more expensive through the Costco program. Remember, we waived the dealer handling fee for you. Costco’s pricing includes the dealer handling fee.”
At this particular dealership, the dealer handling fee amounted to $389. This meant, at least nominally, my negotiated price was $389 better than the Costco program’s price at this dealership. Given the significant savings I achieved on my car purchase through negotiation, this was already an excellent price point. Crucially, my final negotiated price was even better because I managed to eliminate the dealer handling costs entirely, something that seemed to be included in the Costco pricing.
Furthermore, I believe that the competitive bidding approach I advocate likely played a significant role in achieving such a favorable price. The initial offer from the dealer wasn’t as competitive as the final offer I secured after fostering competition among dealerships. This highlights the power of competitive bidding in driving down car prices.
To ensure a complete understanding, I followed up with another question to my dealer: Beyond the dealer handling fee, would the base price offered through Costco have also been different – either higher or lower? And if so, by what margin? My inquiry was driven by simple curiosity, aiming to assess the validity of Costco’s claims of providing exceptional value through their car buying program.
His clarification was informative: “Costco pricing is established by the dealerships themselves. Costco doesn’t directly sell vehicles; they aren’t licensed to do so. Instead, they channel your information to us, the dealer, and we provide the pricing. The price we quoted you directly was a ‘net, net, net’ price – essentially our cost for the Forester. The Costco price would have been identical to that base price, but it would have included the dealer handling fee, which we waived for you.”
Man with new car and set of keys-new
Again, while it’s plausible that the competitive environment I created contributed to the particularly low base price, the dealer’s response suggests Costco’s base pricing is indeed competitive. However, it appears that utilizing a strategic bidding process like mine could potentially yield even greater savings than the Costco car buying program alone.
It’s important to note a potential caveat: dealerships may possess some degree of autonomy in setting the Costco price, which means individual experiences could vary. Therefore, while the Costco car buying program appears to offer good value, direct negotiation, especially employing competitive bidding, may still provide the opportunity to secure the absolute lowest price possible on a new car in 2016.
