By Adam Jusko, ProudMoney.com, adam@proudmoney.com
I hate buying cars. I hate going in and dealing with the salespeople. I always feel like there are a lot of fake niceties but in the end their goal is to sell me a car at the highest possible price and make a sucker out of me. I hate feeling like I’ve been played for a fool.
So, for the second time in the last 10 years, my wife and I bought a car through the Costco Auto Program. This time, though, the process included an unintended experiment, which added to my appreciation of the Costco car buying experience. I’ll tell you about that experiment in a moment.
A quick review of how the Costco Auto Program works
Costco does not sell you a car directly. Instead, Costco has a network of dealers it works with, and it sets firm prices on car models with those dealers. The price you get will probably be invoice + $500, but not always.
There is usually a dedicated person at the dealership who deals with Costco customers. He or she has a whole book that details what each model sells for; you can ask to see that if it is not volunteered by the sales person. Note that some dealerships leave out certain models from the program, usually popular models that they think they can sell at a higher price without Costco’s help.
Our experience
About eight years ago, we bought a Toyota Highlander through the Costco program. We had done tons of research online and felt confident the price we were given was excellent. Was it possible we could have saved a few hundred dollars by relentless negotiating? Maybe. But our research showed we were right around the lowest point we could expect to pay.
This time we bought another Toyota Highlander. That was not the original plan, but our first Highlander was excellent and after a few test drives we saw no reason to change models simply for the sake of changing. I tell you this not to promote the Highlander (although it’s great), but because it relates to our unintended experiment.
After visiting a couple of dealerships, we decided we wanted the Highlander. Because we made that decision somewhat on the spur of the moment, we hadn’t looked into the Costco program yet. So, we started talking price with the salesperson. He gave us the whole rundown on what their offer would be, acting like he was giving us some huge break on the MSRP. We started negotiating with him a bit, and he came down in price. Then we left, deciding we wanted to do a little more research. (It was late September and we were wondering if we might catch a break buying a vehicle from the current model year since the dealership might need to make way for the following year’s inventory.)
That’s where the Costco Auto Program came in. We got a list of local dealers from Costco that were part of the program and contacted them. We got a quote on the Highlander from a different dealer that was much better than what we saw at the dealership we’d visited. The quote was from a dealership a little further away from where we lived, but it would be worth the extra effort.
That’s when we got contacted by the first dealership again. When we told him that we had a better quote through the Costco car buying program, he immediately said, sounding somewhat panicked, “Oh, you’re Costco members? We’re a Costco partner, too. We can match that price!” So we went back and bought the car from the first dealer, even though he had wanted to snow us and give us a bad price initially. (That’s what they’re all trying to do, amiright?)
An interesting side note: We saw the Costco pricing binder at the dealer we purchased from, and the Toyota Highlander was actually not part of the Costco program at that dealer (which is maybe why that dealer didn’t show up on the list of dealerships that Costco gave us). But once they knew a different Costco dealer did include the Highlander in their program, they were ready to match the price. So, if a dealer tells you that a certain model is not part of the Costco program, that may be true only at that dealer, so be sure to check around.
They’ll still try to upsell you.
Buying from Costco will help you get a low price, maybe the very lowest price, though you can always find some smart guy/girl who’ll tell you that they did even better thanks to their masterful negotiation skills. If you want to go down that road, it’s your time and hassle; we don’t believe you’ll do much better than going through Costco.
That said, the dealer doesn’t make much of a profit off of Costco sales (they actually pay Costco to be part of the program). That means they do their best to get money out of you in other ways. You’re likely to get the hard sell on warranties and financing. And your trade-in offer might not be great, so if you’re trading in, you might want to do some extra work to see if you can do better on the trade elsewhere.
Bottom Line Review: Go for it!
Article originally published November 1, 2017