Costco Is Selling Car ?

[HTSS_TR]

According to Yahoo Finance, Costco is selling cars to its members. But, then it states that Costco works with auto-buying service.

I think actual buying process is the same at authorized dealers, but with pre-negotiated price for Costco members. The price may be lower than MSRP, but may not be as low as a good negotiator can get.

"It works with an auto-buying service to negotiate the lowest prices.

The retailer has a huge advantage over traditional car dealerships: It doesn't need to make money from the cars it sells.

Because of other income streams including membership fees, groceries, gas, and apparel, Costco can afford to sell its cars for lower prices than competitors can."

http://finance.yahoo.com/news/costco-becoming-huge-threat-car-140141652.html

 

[bdcardinal]

We do it a my work. The dealer keeps the inventory, and Costco does all the back end work. Kind of like hiring a professional car buyer to come with you to the dealer.

 

[zach1900]

They've done this for years Afaik

 

[Phishin]

When I worked at Eli Lilly (a big Pharmaceutical company 45k+ employees) their credit union used to basically do the same thing.

You walked into the CU's office on our campus, told them you were looking for a car. They asked you what you to give them a list of cars you wanted to test drive. The dealer brought these cars onsite for you to test drive the next day. You could drive one home that day. The price was set in stone.

It was easy and the prices were pretty good too.

But that's what happens when 2/3's of your 45k employees make 6-figures.

 

[raytseng]

The main part though, just like with the revamped "truecar" dealership network, is the "no-haggle" agreed upon price.

Haggling as a whole is an inefficiency on the system and the consumer, and overall the consumer loses out from having information hidden from them.

People only like to haggling because it makes them feel superior that they got a better deal for their "work"... until they find out someone else got a better deal.

As with the revamp of truecar, they must leave some money on the table to maintain a win-win partnership with the dealers, and the discounts are offset by saving dealer time and increased volume.

If they cut the dealers so far where it is a win-lose, then the partnership will not work. (This was truecar about 3-4years ago, before they retooled and rebuilt themselves)

 

[OneEyeJack]

I wonder how much the fixed price scheme helped/hurt Saturn.

 

[Alfred_B]

Originally Posted By: OneEyeJack
I wonder how much the fixed price scheme helped/hurt Saturn.


It hurt them tremendously. While people say they hate haggling over the price of a car, in reality they feel victorious at getting a deal by reducing the price the dealer initially presents.

 

[wallyuwl]

When we bought our recent vehicle there was no Costco partner Ford dealer within a 50 mile radius. So I did it the "new" fashioned way - over the internet on my own. Ended up getting a price 23% off sticker with the dealer discount off sticker and rebates, with only a $75 doc fee, the whole thing put me way, way, way, way on the "less" end of the TrueCar normal distribution curve. Pretty sure our purchase established (or would have, not sure if they actually track every sale) the new low on their price curve.

But the whole point of the Costco auto buying program is to get a "fair" price without having to haggle. They have the same program for things like ATVs and snowmobiles.

 

[Panzerman]

I always thought Truecar was a bit of a joke. Why would you base your price on someone elses bad bargaining skills. I want the best price of what I will pay, not what someone else pays. I think you did good.

 

[user52165]

Originally Posted By: zach1900
They've done this for years Afaik


Absolutely. I've been a Costco (and it's predecessors) member for 31 years and this been around a loooooooooooooooong time.

Not sure if it's still in effect, but also RVs and boats.

Most car dealers choose not to participate in this service. I have always beaten the fixed Costco negotiated price. Last time I tried, I had a "guaranteed" price with the salesman. The Finance Manager nixed the deal. I went elsewhere.

 

[Silverado12]

You can also get a no-haggle supplier price on a GM car by being a credit union member.

 

[jimbrewer]

I've come close to buying a car this way a couple of times. The thing that held me back was the transportation fee. I live in the country and I would have had to pay about $400 to have it shipped, from 400 miles away. It makes a very good deal a pretty good deal.

The last time I nearly pulled the trigger, but I got the inspiration of offering local dealer the same price plus half the shipping fee. I didn't tell him I was doing that of course.I Knew full well that he would make that deal. He did, but man, it was brutal. They practically threw me off the lot at the end of it. It was off the Truecar bell curve.

A couple of things: How do you know your buying service is getting good prices? You don't really. How do you know a service with good prices for Ford also has good prices for Chevy? You don't know that, either.

 

[bdcardinal]

It is pretty entertaining listening to people that used Truecar and are convinced they screwed the dealer. The house never loses. They made money on my deal with employee pricing. I paid under invoice, the General Manager did all my paperwork, and they skipped the detail because I didn't want the optional dealer installed swirl package. Also the sales person on my contract was listed as the GM so there wasn't a commission paid on the deal.

 

[CT8]

If the dealer gave you the car for free they would somehow make money on the gift.