Merchant Innovation

Costco Auto Gaining Strength

Car dealerships. Love them or hate them, consumers have been reluctantly buying their new and used vehicles from these scrupulous lots for decades upon decades. However, Costco, an unlikely player in the car-selling market, put the pedal to the medal in 2015.

AutoGuide reported that Costco saw record-high car sales in 2015, with its sales jumping 16.8 percent compared to the year prior. In total, the Costco Auto Program saw about 465,000 cars roll off the lot. The wholesale retailer can thank two distinct factors for higher sales last year, as both a special year-end promotion with General Motors and supplier-only discounts were extended to consumers.

The GM promotion, known as the 2015 GM Holiday Sales Event, offered customers promotional pricing and added benefits, such as immediate cash back from Costco, depending on their membership levels, and special financing, depending on the region in which sales took place. Overall, these tweaks led to more than 58,000 GM vehicles moving off Costco’s lots — a 34 percent increase compared to 2014. Moreover, over 50 percent of all auto sales were made by consumers who were driving another manufacturer’s vehicle.

In an emailed statement to AutoGuide, Honey Mae Kenworthy, director of corporate communications for the Costco Auto Program, noted just how special these kinds of numbers are for both GM and Costco.

“The 2015 GM Holiday Sales Event holds the record for all our limited-time offers,” Kenworthy said.

While it’s likely that Costco and GM’s success in 2015 can be chalked up to dozens of individual factors, Dave Sullivan, analyst at AutoPacific, told AutoGuide that the pre-negotiated pricing Costco uses may have cut out a good chunk of headache and hassle that consumers normally associate with the car-buying process.

“If you can apply that to any brand, that’s great; whether it’s a Jaguar or a GMC, you can take hours out of the sales [process],” Sullivan said. “That’s valuable time for the customer.”

It’s proven valuable for the retailer, too.


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