This may sound obvious, but while non-members can use some of the Auto Program's research tools, you need to be a Costco member to be eligible for the discounted price.
One of the most difficult parts of car shopping is figuring out where to start and end your research, especially if you don't read car news and reviews for fun.
The Costco Auto Program brings reviews, safety ratings, a financial calculator, and vehicle comparison tool under one roof. While it never hurts to compare research from multiple sources, the Costco Auto Program's website gives customers a good place to start.
According to Borg, Costco works with one dealership per brand in a defined geographic area around a given Costco warehouse. And at each participating dealership, only a handful of salespeople are authorized to work with customers shopping through the Auto Program.
Borg said Costco picks dealerships based on their prices, customer satisfaction index (CSI) scores, and reputations on social media. And authorized salespeople are also evaluated based on their CSI scores and must work at their dealership for at least six months before being eligible for the program.
But the limited number of dealerships and salespeople makes things a little more difficult for customers who don't end up satisfied with the first dealership Costco recommends to them. While Borg said Costco can point customers to other participating dealerships if they don't like the first one they're sent to, they may not be geographically convenient.
Negotiating the price on your car can be an intimidating process. The dealership has much of the information — inventory, the dealership or salesperson's proximity to their quarterly goals, the average discount customers receive — you need to negotiate the lowest possible price.
Borg said Costco takes a holistic approach when negotiating prices with their participating dealerships, looking at national and local prices for given models, as well as the prices customers can find through other discount programs to determine the discount its members should receive. And since it has a large membership base it can funnel to selected dealers, it has more leverage than any individual shopper.
If Costco's incredibly generous return policy is any indication, it will bend over backward to retain its members. Since buying a car is a much bigger investment than the average grocery shopping trip, the company doesn't wants its members associate Costco with a $40,000 purchase they regret.
While Borg said the company is "fairly selective" about which dealers it works with, it also provides customer support before and after a purchase. If a customer, for example, finds a scratch on her car immediately after buying it and it falls outside of her warranty, Costco can at least serve as a mediator between the customer and dealership.
"Are we going to advocate for members? Absolutely," Borg said. "Should a dealership have concerns as to whether they are responsible [for cosmetic damage] or the customer, we're certainly going to step in and have a conversation with the dealer and ask them to do the right thing."
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