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Should you buy a car at Costco?

James Leggate

Costco Wholesale Corporation is best known for its bulk groceries, but the Issaquah, Washington-based company offers many items that some consumers may not even be aware of, ranging from jewelry to office electronics.

One of those less obvious perks for Costco members is the Costco Auto Program, though it’s actually very popular. Costco members bought more than 600,000 vehicles through the program in 2019, according to the company. That’s even more autos than are sold by the largest dealership groups in the U.S., according to Automotive News.

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However, Costco isn’t selling all these cars itself. Here’s a look at how the program works, and whether it may be worthwhile for you:

Costco Auto Program offers cars, trucks, and SUVs from 34 different brands, ranging from value to luxury. It partners with select auto dealerships across the country to sell vehicles at prearranged prices, generally below MSRP.

Members can search for new or used vehicles by make, model and year on the Costco Auto website or by calling. After selecting a vehicle, one of Costco’s partner dealers will contact the buyer to set up an appointment, or Costco will provide the buyer with the dealer’s contact information.

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Going through Costco means buyers won’t have to worry about haggling over price at the car lot. The dealerships must “agree to meet strict pricing requirements” to participate, according to Costco. Also, the company has member advocates available to work with the dealership, double-check prices and review the purchase contracts.

The company will sometimes work with specific automakers to offer exclusive sales or incentives on their brands.

Costco members save an average of $1,100 to $1,200 compared to the average transaction price for a vehicle, according to the company.

Prices vary in different locations. The program was offering new 2020 models of popular vehicles like the Ford Explorer or Toyota Corolla for about $1,000 less than MSRP in multiple ZIP codes reviewed by FOX Business this week.

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Costco’s team also uses “shadow shoppers” to ensure dealers are complying with its program and providing members with the level of customer service it requires.

More than 95 percent of Costco members who used the program gave high marks to its value, service and overall experience when surveyed, according to Costco.

Of course, there is a catch. Only Costco members can buy vehicles through its auto program. But with the base Gold Star membership costing just $60 per year, there’s a good chance a buyer can join just to purchase a vehicle and still walk away with savings. And non-members are still able to search on the Costco Auto website to check prices.

There’s also no guarantee that Costco’s prices will be the lowest. Whenever making a major purchase like a car, it’s a good idea to do some research and shop around. Wait for a holiday sale or time of the year when prices dip and see if the automaker advertises lower prices. And for those who love haggling, it may still be possible to get a better price by negotiating with a salesperson in some cases. Even if the dealer won’t budge, a consumer could walk away and come back later with Costco’s price in hand.

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The Costco Auto Program dates back to 1989. It’s operated by Affinity Auto Program, which offers a similar membership-based vehicle buying program outside of Costco, too.

Costco has more than 500 locations in the U.S. and more than 101 million cardholders, according to the company. It reported $149.4 billion in revenue in its last fiscal year.

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