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Costco is selling more cars than ever before by offering one key perk

Business Insider logo Business Insider 4/3/2019 Kate Taylor
a car parked on the side of a building© YouTube / Costco Auto Program
  • Costco sold more than 650,000 cars through its auto program in 2018, an increase of more than 25% from its 2017 sales figures.
  • The retailer has a major perk that traditional car dealerships lack: fixed prices, negotiated by Costco Auto Program employees.
  • While Costco does not make any money on the auto sales, the retailer is growing the program as a way to attract new members and maintain existing members' interest.

Costco is selling more cars than ever before.

Research

Costco members purchased more than 650,000 cars through the Costco Auto Program in 2018. That's an increase of more than 25% from 2017, when the program sold 520,000 vehicles.

Costco's auto business has quietly skyrocketed over the past decade. In 2008, the Costco Auto Program sold roughly 200,000 cars.

The retailer plans to continue to grow its vehicle business, Costco Auto Program said in a statement. Costco plans to offer several promotions and member-only incentives in 2019, as well as grow its employee base of more than 300 workers.

The Costco Auto Program allows members to research and compare vehicles, calculate monthly payments, and get a discount at participating dealerships through the program's website or call center. A representative for the program told Business Insider that the average discount was over $1,000 off a vehicle's average transaction price.

Read more: People are obsessed with buying cars through Costco instead of at dealerships - these are the biggest differences between the two

Despite the growing business, Costco doesn't make money on the auto sales.

The vehicles are sold through partnerships with more than 3,000 auto dealerships in the US, meaning that, technically, Costco itself does not sell the cars. Instead, the retailer uses the program to attract new members and maintain existing members' interest.

Costco has one major perk that traditional car dealerships lack: fixed prices, negotiated by Costco Auto Program employees.

The retailer has more leverage than the average person shopping for a car, allowing Costco members to get impressive discounts on purchases. At the same time, customers can skip the bargaining and upselling often expected at car dealerships.

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