US: Costco has become a great car dealership image

There are US consumers who don’t bother to hit a dealership when they are out looking for a new auto – they just visit their local Costco. That’s because the warehouse retailer exempts them from haggling or upselling.

The reason is simple, the retailer simply offers its members a great price, which is below the manufacturer’s recommended price. Last year alone, Costco Wholesale was responsible for about 400,000 vehicle sales across all key brands in the US, jumping twice the figure it was registering back in 2008. There’s little to no publicity and marketing, as the membership-only merchant better known for being the perfect flatscreen TV and jumbo-size cereal box retailer has actually pushed its car sales business to within a hair from the largest car retailer in the country – AutoNation, which had deliveries of 5333,000 units last year. “That’s a much bigger number than I would have expected,” says LMC Automotive analyst Jeff Schuster. “This reinforces that everybody wants a deal, but they don’t want all the headaches of haggling.” Costco is playing the US consumer’s tiredness of having to deal with the traditional car dealer.

There are numerous services today that seek to lift the auto shopping experience by giving things such as price transparency, one-stop comparisons of multiple brands and models, or even leveraging their assistance in dealership negotiations. According to JD Power, the services have been used by 65 percent of new vehicle buyers last year, jumping from 40 percent back in 2008. Costco actually uses an auto-buying service called Affinity Auto Group, with the $112.6 billion retailer leveraging its business power to get huge discounts that may benefit its 45 million US members.

Via Bloomberg