Donald W. Reynolds National Center For Business Journalism

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Buying a car via Costco

June 5, 2015

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Costco members know they can buy a wide variety of products, from flowers and tires to pizza, in the vast warehouse stores and online.

Now, Bloomberg Businessweek reports that Costco has quietly become a major player in selling automobiles.

In 2014, Costco Auto moved almost 400,000 new vehicles of all major brands in the U.S., twice as many as in 2008. It also offers used cars, motorcycles and RVs.

The new car sales compare with the No. 1 car retailer, AutoNation, which sold which sold 533,000 vehicles last year. “That’s a much bigger number than I would have expected,” LMC Automotive analyst Jeff Schuster told Bloomberg Business Week. “This reinforces that everybody wants a deal, but they don’t want all the headaches of haggling.”

You can’t just pull up at a Costco and drive home in a new vehicle. Costco works through a buying service called Affinity Auto Group, arranging discounts for its 45 million members.

For instance,  Costco and General Motors last October offered U.S. buyers a $500 store gift card plus a non-negotiable price for most GM models. In the fourth quarter of last year, GM sold 43,300
vehicles through Costco, or about 6 percent of the automaker’s total domestic sales in that period.

Thus far, Costco isn’t making any money itself on the auto sales, allowing any profits to go to the local dealers who deliver the cars.

And, where Costco once couldn’t get automakers attention for the promotion, Gina Paolino, president of the Costco Auto Program says automakers are now coming to it.

For story ideas, see if any shoppers at your local Costco purchased their cars through the program. Talk to local car dealers to see how many vehicles they are delivering to Costco customers.

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