Image: CostcoSome people enjoy shopping for a car. They like the challenge of getting the best car deal possible and don’t mind all the research, time, and let’s face it---some lying that sometimes comes from these places.

But for everyone else, going to the car dealer for a new or used car is like going to the dentist—you have to go but you won’t enjoy it. (Our apologies to the dentists that actually do a great job of making office visits pleasant.)

But one well kept “secret” for savvy car shoppers is that a good car deal can usually be found at Costco, a large direct-to-the-public discount warehouse, do the car dealing for you.

Big Volume Means Big Discounts

Just as it is with Sam’s Club and other warehouse discount stores, you need to be a member to realize the benefits offered by these businesses. Once you have a membership, usually about $55 a year for the basic one, you’re on your way to a stress free car shopping experience.

Costco can offer lower prices on cars because of its enormous clout with retailers. Costco works its magic through an auto buying service named Affinity Auto Group that has $112.6 billion in sales and uses this purchasing power to get discounts for Costco members.

Average savings, on the whole, are about $1,000 per car. To make sure car dealers stick by their promises, as far as pricing, Affinity sends out secret shoppers to do spot checks at these places of business to ensure everything is working and that there are no bait-and-switch tactics.

At the moment, Costco is the #2 biggest seller of new and pre-owned cars, but is swiftly moving up to the #1 position. It averages about 400,000 sales per year.

How It Works

There are usually pamphlets at Costco describing the car buying service or you can visit the Costco Auto website by clicking on this link: Costco Auto.

All you need to do is to decide on which vehicle you want, and any related options or extras for your car. Once this is determined by you, Costco and Affinity do the rest by negotiating a deal for you from over 3,000 hand-picked dealerships.

There’s no muss, no fuss, and most importantly, no hanging out at the car dealer for a whole day to squeeze a deal out of them.

It’s a Gift for Members

According to Costco, they make absolutely nothing on each car sold. Its whole intent is to keep their Costco membership base happy and returning, and to draw new customers in.

While this doesn’t seem to be cost effective, consider the decades old bargain of the $1.50 hot dog and drink deal at the food concession stand, and the outrageously cheap rotisserie chickens at $4.99 a pop at Costco.

Costco doesn’t make a dime on these sales, and is actually losing money on each transaction. Why? Costco wants to make it a point to let its members know that low pricing is real and not just an illusion. This serves as a great subliminal advertisement too.

Costco may lose millions on these food deals, and the Costco Auto deals are probably not far behind, but profit isn’t the point in these cases—it’s the Costco image and returning customers that make the difference in profits.

Source: MSN Money

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