Costco tests new Used Car Buying Service

[Jeff Kershner]

We've discussed Costco and their New Car Buying Program here in the forums before -- http://forum.dealerrefresh.com/f43/who-spending-costco-810.html

In addition to their New Car Buying Program, they've introduced a Used Car Buying Program.

Costco is testing a program that allows franchised dealers to list on its site used vehicles of any brand as long as it has 12 months and 12,000 miles of new-car factory warranty remaining.

Participating dealers have agreed to sell the vehicles to Costco members for at least $1000.00 less than the lowest advertised price.

The test program has been operational for about six months. According to Costco, their members have bought about 1,000 vehicles. So far they have about 135 franchised dealers on the program.

Costco is also reporting close ratio of 38%, just a bit lower lower than their New Car Program that has an average close ratio of 41 percent.

Any DealerRefresh members using this new service from Costco that can confirm the post performance?

I wonder how they are policing the used cars to be sure there is indeed a remaining factory warranty?

 

[Jeff Kershner]

Bumping this because someone outside of the community called me, asking some questions. Anyone using or know of another dealership on the Costco program?

 

[Stefan]

We have been using it for about a year.

Would I recommend the program? Well ... I don't think the answer is that simple, it all depends how you plan in using it. The answer is yes if you get a little creative, no if you just follow the Costco guidelines.

We opted for an additional discount off the lowest advertised price (the $1,000 listed above is negotiable). Next we integrated the Costco Members Price CTA on each New, CPO and Used VDP on our websites and decided to honor the same price structure on CPO and USED vehicles (the program should only apply to CPO cars). All the leads are being handled as true Costco leads and our team must present the Costco price sheet to every customer when working a deal.






Next, the customer is being directed to a Costco Members Price form:



How much success did we have with it? Here are the numbers for 2014



The top row are the leads generated from our website, the bottom are actual Costco Program Leads. Overall, the leads from our website, have a lower closing ratio however still at 20%.

While I don't recommend simply following C guidelines when it comes down to generating the leads, I highly recommend using the guidelines in any communication and/or negotiation. Most of these deals are one pencil deals and customers are normally very happy with the process.

Hope this helps.

 

[joe.pistell]

Stefan,

Your thoughts on Costco program results, new vs used?

 

[Jeff Kershner]

I like that Stefan.

We often hear how different services don't work - especially when it comes to different 3rd party leads and the different services out there such as Costco. Yet when you take the time to build out a process and utilize the service to it's full potential, you're rewarded.

 

[Stefan]

Stefan,

Your thoughts on Costco program results, new vs used?