General Motors and Costco are partnering to offer the discount retailer's members special pricing on new vehicles for Christmas.
With the baseball playoffs just getting underway this week, the Christmas holidays might seem a long way off. But the holidays have emerged as a major marketing opportunity for carmakers eager to take advantage of the season’s sales-oriented environment.
But General Motors and Costco are already kicking off a special promotion built around holiday sales.
The holiday promotion, which began Oct. 1 and runs to Jan. 3, 2017, is for Costco members. Customers who opt for a new vehicle this year will receive either a $300 or $700 Costco Cash Card, depending on their level of membership. The cash card is in addition to the year-round savings customers receive on GM vehicles through Costco.
“Seeing the continued success of the Holiday Sales Event with each year, GM is pleased to offer the largest selection of vehicles to date for Costco members that will make the event just as popular, if not more so, than last year’s event,” GM spokesperson Jim Cain said in a statement.
Last year, Costco sold 58,000 vehicles during the holiday promotion, a 34% increase from 2014.
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All in all, Costco sold 465,000 vehicles through partnerships with auto dealers in 2015. Technically, Costco itself does not sell the cars, and doesn’t get a cut of the sales price since the sale is handled by one of approximately 3,000 Costco-approved dealers.
Overall, Costco is moving in on becoming the No. 1 auto retailer in the U.S., displacing AutoNation, which reported sales of 533,000 units in 2015.
Costco’s Auto Program is a small network of dealers with whom Costco negotiates for the best price for its members. To sign up, a customer must first register with Costco and will then receive the name of a salesman who is authorized to provide the Costco deals.
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Once at the dealership, the price is fixed, subject to add-ons. Customers who go to a dealership on their own without registering through Costco will not receive the same benefits or price.
The program doesn’t make Costco any money directly — vehicles are purchased through the dealerships, not through the warehouse.
By offering a service which takes the stressful negotiating out of car shopping, certain customers would be willing to pay $55 for a Costco membership in order to use the Auto Program.
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Costco also makes money by servicing vehicles. Customers who use the Auto Program are eligible for a 15% discount on parts, service and accessories.