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Discussion Starter #1
The things the finance office sells you are huge profit makers for the dealership.
What he said.

We purchased our Insight Touring through the Costco program, and it was all relatively painless until we got into the finance office. We got the hard sell on all sorts of different service plans, extended warranties, etc... that ended up with me telling the finance guy politely "I already said no twice" on one of them while my wife rolled her eyes.

Our out-the-door price was $26k going in to his office, but his initial pitch would have driven up the price of our car by $3500 bucks. I know the dealer did not make much $$ off of us via the sale, and I figure the finance guy was trying to make it up with add-ons. Some of those things might make sense (pre-paid oil changes and maintenance plans, for instance, for someone who doesn't do that themselves and lives close to the dealer). Some make no sense at all (insurance packages that would end up costing $2500 over 5 years).

Why would I buy an extended warranty on a wear item like tires, for instance?

The bottom line is the sales person is selling you a Honda product, backed with Honda warranties. The finance guy is selling you aftermarket, non-Honda things that increase the dealer's profit margins on the sale of the vehicle. The dealer has a huge incentive to get you to buy those things, but as a consumer there is no reason at all for you to buy any of them.
 

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Discussion Starter #2
If one is not comfortable dealing with the "car dealer experience" and you are a Costco Member, going through the Costco Auto Program is a pretty painless way to go and generally results in a decent deal. You can do a little better haggling yourself and going to the mat if you are comfortable with it, but in my case the Costco system got me a price that was right in the ball park with the best case scenarios from True Car.

Just be prepared for the hard-sell in the Finance Room, and tell them up front you used the Costco Program because you don't want your time wasted by salesmen or finance guys trying to sell you aftermarket things you don't want. Repeat it a couple of times. Did you mention how you like the Costco Program because you hate dealers who waste your time trying to sell you things you don't want? Also, isn't it great that the Costco program lets people rate their dealer experiences?

Dealers compete to get the Costco referrals, and Costco will send you a survey asking about your experience with that dealer. It is in their interest not to piss you off and have a negative review of the dealership go in to Costco.
 

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If one is not comfortable dealing with the "car dealer experience" and you are a Costco Member, going through the Costco Auto Program is a pretty painless way to go and generally results in a decent deal. You can do a little better haggling yourself and going to the mat if you are comfortable with it, but in my case the Costco system got me a price that was right in the ball park with the best case scenarios from True Car.
Sounds like Costco pricing has improved greatly on the Insight since Sep 2018...

At that time, the Costco 'discount' on the Civic EX w/ Honda Sensing was $50 off MSRP (not a typo) and was $300 on the Insight EX. I was skeptical so they literally showed me the binder with the pages of Costco prices by model and trim. I thought the 2018 Civic would be more discounted, because the 2019 Civic (refresh) was about to come out... but the 2019 Civic refresh also made Honda Sensing standard so the 2018 with Sensing wasn't discounted.

In the end, I did better to negotiate below-invoice price on the Insight EX myself... but it's always worth a check/look.
 

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Sounds like Costco pricing has improved greatly on the Insight since Sep 2018...
Or June 2019. For me, Costco was just a dealer referral service. The dealer they shared my info with didn't even want to give me a price. When they finally did, it had minimal information and wasn't as low as many cargurus prices. Plus, the Costco dealer wasn't one of the 3 closest ones. For Costco, I expected an interface where they showed me all the numbers and stock information and at least a decent price before having me contact a dealer for the usual BS, not simply leave it to the dealer to negotiate everything. I can do that on my own.

TrueCar was horrible, too. They mass send your contact info to multiple dealers without warning. You think you are clicking to see the dealer pricing, but then you click the button and wham, now you have 5 dealers spamming you. Plus, they don't send all the necessary info to a dealer, so if you are interested in a Fusion Energi or Ioniq PHEV or something, they spam you with emails and call for all the non electrified versions even if they don't have that version you want in stock. Then, since they didn't have the right version or trim, the TrueCar interface never gets the pricing info from the dealer and you are back to square one.

Cars.com and Cargurus.com were a lot more useful for what I wanted, which was pricing and inventory. Then I know the lowest prices around and can call dealers that actually have the trim and color I want and negotiate lower from there.
 

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Discussion Starter #5
My understanding is Costco pricing is based of the market average for what a vehicle has been going in recent sales. The Truecar service is similar. Dealers enter into an agreement with Costco to sell at a given % above or below average market price if Costco refers customers to them. Costco makes money off people paying for their memberships, and the dealer makes money because it gets additional customers (and likely the kind of customers who typically pay dealers for service and accessories).

If a vehicle is a new model or a fresh redesign and selling relatively quickly/easily, dealers are not going to give Costco much of a discount. If it's been around for a couple of model years and sales have slowed down, the discounts would be greater.

In a couple of months, I'd imagine one could get a great deal on a plain CRV via Costco, but end up paying nearly full MSRP on a CRV hybrid.
 

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  1. FACT: Those big Internet car-info and buying sites aren’t in business to get you the best price. The bulk of their revenue comes from car-company advertising and the $300+ referral fees they get when you buy or lease a car from dealers in their networks. Even Consumer Reports, which once promised it wouldn’t recommend any product or service “for financial gain,” earns substantial revenue from TrueCar when you drive home a car from the TrueCar dealers CR sends you to in its “Build and Buy” service.
  2. FACT: Those sites are in business to help dealers sell cars profitably to pocket those referral commissions, which come from your pocket. The "target prices" those sites give you won't make dealers unhappy because they're typically based on "what other people in your area have paid for the same car." (If you're sitting there thinking, "I hope I get to pay what others have paid," you're every dealer's dream customer.)
  3. FACT: If you contact dealers in their networks for price proposals, they'll be on you like red ants on a spilt snow cone. Don't even think about doing that. Your first discussion with them should be when you call their Internet Sales Managers to get their participation in the Fighting Chance competitive bidding process.
https://fightingchance.com/
When you buy through the Costco auto program you're essentially agreeing to an offer that puts a floor to how low you can buy the car. Costco has stated that they don't make any money from the Costco auto program but their affiliate that runs the program does. They take money from participating dealerships and that money will come out of your car purchase since the dealership will have to recoup that fee.



Costco and its affiliates do not sell vehicles or negotiate individual transactions. A participation fee has been paid by the participating dealers. All new vehicles arranged for sale are subject to availability and a price prearranged with the participating franchised dealer. Certain vehicles may be excluded from the program. Actual savings may vary based on vehicle purchased, dealer and location. All information and vehicle data available on this website has been provided by reputable third parties. Costco Auto Program, Costco Wholesale, Affinity Development Group and its subsidiaries make no implied guarantees or warranties to this data.


The Costco Auto Program is operated by Affinity Auto Program, Inc. (“CAP”, “we”, “us” or “our”). Affinity Auto Program is an independent company, not an affiliate of Costco Wholesale Corporation (“Costco”).
 

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I wholeheartedly agree. I used several resources to check pricing around the area, but did not mention them at all once in the dealership.

I used a dummy contact info to see what I wanted to. I was mainly interested in dealer holdback %, reported invoice price, and inventory of local dealerships. I did not want to make an appointment and not even have the option of them having the car we wanted, also knowing other dealerships inventory gave me the added ammunition we needed. On the way out the door, I mentioned to my fiancé that we were heading to another dealership that had the car we wanted in stock.

Even local credit unions, that have an auto-purchasing program. They get to keep some of the deal on the back-end. Essentially, they do the work, and take away any bargaining power on price.
 

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Here is Affinity Auto Program's(they might be related to TrueCar) pitch to dealerships.

Unique access to loyal Costco members

  • We provide you the opportunity to expose your brand to quality buyers who represent high-end demographics.The average household income of our members is more than $113,000 and approximately 97.7% own vehicles.
We're Different and Better
Our programs have been tested over time and have proven successful for participating dealerships for more than 25 years. We have the industry knowledge, support staff and operational infrastructure to provide our dealer network with a level of service unmatched in today’s marketplace. You can count on us to provide the tools you need to sell to our members, get the most out of this business relationship and achieve the high closing ratios we’re known for.

  • One-on-one assistance
    Every dealership in our network has unparalleled support. We work closely with your dealership to establish pricing, handle any questions or concerns you may have, and deal with all administrative issues.
  • Proprietary pricing modules
    Our proprietary pricing modules monitor local markets and notify our dealers when pricing needs attention. Plus, our Intranet site allows dealers to submit pricing updates for review, to maximize sales.
  • Dealer training and compliance
    Buyers who use our auto programs expect a lot. To ensure your dealership meets and exceeds their expectations, we've developed a comprehensive training program that all dealerships complete before working with our members.
  • Unmatched support
    To help generate positive purchase experiences among those using our programs, we have a team of representatives on hand seven days a week to answer questions and ease any buyer concerns that may arise during the purchasing process. This generates a high level of consumer and member support for your dealership and builds trust – increasing the likelihood of repeat business for your dealership.
As you can see the price is not negotiated for the buyer's benefit. Dealerships are their actual customers so they're looking out for them first. The car prices in the program are set to maximize sales/profits based on what they think the market will bear at a certain time.
 

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As you can see the price is not negotiated for the buyer's benefit. Dealerships are their actual customers so they're looking out for them first. The car prices in the program are set to maximize sales/profits based on what they think the market will bear at a certain time.
LOL, so the 'market' found a $50 off MSRP discount on a new 2018 Civic EX w/ Sensing 'acceptable'... yet the reality was that local sales prices listed by TrueCar were significantly lower.
 

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LOL, so the 'market' found a $50 off MSRP discount on a new 2018 Civic EX w/ Sensing 'acceptable'... yet the reality was that local sales prices listed by TrueCar were significantly lower.
I don't think they expect all Costco customers to the be the type that will look elsewhere for pricing information. Based on the dealer testimonials and the following statement...
Boasting leading closing ratios across all platforms, we set the standard for service and value. In fact, our automotive programs enjoy closing ratios in excess of 40% and more than a 60% closing ratio with our manufacturer promotions. Our participating dealerships have sold approximately two million vehicles in the last five years alone and more than 97% of Costco members using Costco Auto Program rate the experience as good to excellent.

Delgado’s dealership sells 12 to 15 vehicles a month through the Costco program. He says the closing ratio with Costco customers is 55% to 60%, compared with 20% for dealership walk-in buyers and 12% to 14% for Internet shoppers.


Costco customers automatically assume store prices are as low as it gets, says Jim Delgado
Your $50 off MSRP example shows buying through Costco's auto program isn't going to give you the best price. It's more about getting a good buying experience and not needing to haggle. If you want a good price you can do a lot better by yourself.
 

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Discussion Starter #11
I would say the price you get from Costco is going to depend on the vehicle you are looking at. We went with our dealer (Swickard in Oregon City) via the Costco referral less for no-haggle experience than the fact that the prices they quoted for the 2019 Touring and 2020 EX were lower than I was able to get the three other dealers in the area to go over the phone.



I have no doubt I could have beat the Costco price by a few hundred dollars had I kept at it and gone into those dealers in person and haggled. But at some point you have to put the value of your own time and hassle into the equation. Based on what others have posted, our $25,100 price ($26k out the door after taxes, tags, and state fees) for our Touring seems pretty competitive.



My take is Costco is mostly for folks who hate haggling or don't want to spend the time on the the "car dealer experience" that comes with a purchase. In my case, I got that price quote then called around to three other dealers in our area (two in Oregon and one across the river in Washington) to see if they would beat it, and none of them would over the phone. Had one of them done so, I'd have dropped the Costco purchase and gone with them.
 

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I agree, time saved is also important. There is an opportunity cost to haggling over a few hundred dollars vs dedicating that time to make more money instead. It's why people pay for services like Instacart and Amazon Prime to save time from having to go to the store.
 

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I agree, time saved is also important. There is an opportunity cost to haggling over a few hundred dollars vs dedicating that time to make more money instead. It's why people pay for services like Instacart and Amazon Prime to save time from having to go to the store.
The older I get, the more I understand the value of non-monetary assets. Time, peace of mind, meditating, etc...
You can always make more money, time is the one asset you can't get more of.

Simple answer is buying a car is a terrible investment 99% of the time. You (the buyer) choose your expectations, Costco, Truecar etc... they offer a very simplified buying process. And because their model is built on "saving you money" people natively trust that it's a good deal. Like most businesses in the world, they need profit to succeed, so instead of saving anyone money, they attempt to save you time (because time is money).

Now if someone could just replace the finance office with a computer terminal, so I can read my docs, sign them and be on my way...
 

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Discussion Starter #14
Now if someone could just replace the finance office with a computer terminal, so I can read my docs, sign them and be on my way...
Credit unions kind of, sort of, help with this. The last few major purchases where we've needed financing my wife and I went with pre-approval through OnPoint or Advantis here in Oregon. They are usually within a couple tenths of a percent of the best that a dealer can offer, and it is nice to just hand over the pre-approval letter and not have to debate any of that stuff with the dealers' finance department. Major reduction in paperwork and opportunities for dealer subterfuge.

Of course, it doesn't help with the dealer trying to sell you their super, extra, mega special aftermarket warranties, service plans, and assorted crap. :sad:
 

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My take is Costco is mostly for folks who hate haggling or don't want to spend the time on the the "car dealer experience" that comes with a purchase. In my case, I got that price quote then called around to three other dealers in our area (two in Oregon and one across the river in Washington) to see if they would beat it, and none of them would over the phone. Had one of them done so, I'd have dropped the Costco purchase and gone with them.
I went extra step of getting the Costco quote from an out-of-area dealer, so as not to affect my negotiations with local dealer(s). Had I gone with the 2018 Civic EX w/ Sensing at the time, doing so was a smart 'strategic' move, since the dealer would have only talked price from the $50 MSRP discount, rather than entertaining the closer-to-invoice offer I wanted to make.

The dealer I ended purchased from also participated in the Costco program, but having the prices separate from that negotiation helped to start negotiations from a lower price point and I just kept the Costco info in my back pocket as info to arm myself.
 

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Credit unions kind of, sort of, help with this. The last few major purchases where we've needed financing my wife and I went with pre-approval through OnPoint or Advantis here in Oregon. They are usually within a couple tenths of a percent of the best that a dealer can offer, and it is nice to just hand over the pre-approval letter and not have to debate any of that stuff with the dealers' finance department. Major reduction in paperwork and opportunities for dealer subterfuge.

Of course, it doesn't help with the dealer trying to sell you their super, extra, mega special aftermarket warranties, service plans, and assorted crap. :sad:
Yes, we were pre-approved as well. They actually beat the percentage by a few tenths, but it didn't include some of the benefits of her credit union's loan (like included gap insurance, which I'm sure isn't actually free).

Just upsets me when I start the conversation with the finance guy off with:

"This interaction will determine how likely I am to refer business to your dealership. I'm not asking for anything extra, or free, just please don't try to sell us anything additional. We are not interested in any warranties or service packages."

And 3 minutes into us sitting down he casually hands my fiancé a warranty brochure to look over. He saw me glance and apologized, saying that the dealership requires him to "offer" the warranties, and he figured the least confrontational way was to hand a brochure, vs asking us.
 

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From now on, I'm just going to walk out of that finance room like my uncle did a few weeks ago. I've never seen a finance manager cut the crap and finalized everything so quick. It's even better than my tactic of canceling the contract later and getting a refund check. :D
 
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