Costco Wants to Sell More Cars

For the past several years, Costco Wholesale Corp. (NASDAQ: COST) has teamed up with General Motors Co. (NYSE: GM) to offer Costco club members special pricing on new GM vehicles through the Costco Auto Program. The 2019 Season of Values promotion begins Tuesday, October 1, and runs through January 2, 2020.

The 2018 Costco Holiday Season event posted a year-over-year sales increase of 22%.

In addition to GM Supplier Pricing and “compatible” currently available GM incentives (for an unspecified limited time), Costco members who purchase or lease a new model year 2019 or 2020 vehicle and fill out a survey form will receive a Costco Cash Card. Executive members receive a cash card valued at $700, while Gold Star and Business members get a card valued at $300. Vehicles available this year include 2019 and 2020 Chevrolet, Buick, GMC and Cadillac cars and light trucks.

Costco does not make any money on vehicle sales. Affinity Auto, which manages the program for Costco, negotiates a vehicle price with local dealers who are then obligated to offer buyers a set price and forbidden from offering additional options. Any dealer or manufacturer incentives are typically included.

Costco services director Mark DerGarabedian said, “Whether members prefer horsepower, fuel efficiency or extra passenger space, this year’s vehicle lineup has something for everyone. We are excited about the opportunity this promotion brings Costco members.”

During the 2018 Holiday Sales event, sport utility vehicles accounted for 47% of unit sales, followed by trucks at 37%. In contrast, SUV sales comprise 58% of the everyday program and trucks make up only 8%. The increased truck share increased during the Holiday Sales promotion, snatching sales away from SUVs.

The Costco Auto Program also provides low, prearranged pricing on certified pre-owned vehicles, powersports and recreational vehicles through its network of participating dealers. More than 82% of all purchases through the program are new vehicles, followed by certified pre-owned vehicles at almost 16%. Costco members also receive a discount on the majority of parts, service and accessories at participating automotive service centers.

In 2018, Costco members purchased more than 650,000 vehicles during the course of the year.

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