Costco's car-buying program: Here's how it works

The Costco Auto Program's come-on is enticing: “Car buying made easy!” Who among us wouldn’t respond positively to such an proposition?

Since 1989, Costco, the wholesale retail giant, has been offering its members special pricing deals on new and used vehicles through its Costco Auto Program. The company says buyers typically save $1,000 by taking advantage of this service (an annual Costco membership is $60).

There are pros and cons to using this method, and prospective buyers need to be aware that Costco doesn’t run it as a charity: it works with “selected” dealers to whom the customers are referred; the dealer network in the U.S. has about 3,000 participants. Ostensibly, both Costco and the dealers stand to make money when a deal is made: The dealers pay Costco a fee, and they make money when they punch out the deal.

Prices are set in the program, a perk for those who hate to haggle. Costco does offer customers a research tool to check out vehicles by type and compare specs and features. At some point, after entering a bunch of details online about the car being considered, one is required to actually visit the selected dealership, chat with an “Authorized Dealer Contact” and discuss the fine print.

Regarding the “no negotiating” provision, there is an opportunity to negotiate if you’re trading in a car. As most of us know, that almost always involves haggling.