Costco is selling more cars than ever before by offering one key perk

  • Costco’s auto program said it sold more than 520,000 cars last year through its partnerships with auto dealerships.
  • The budget retailer says it grew car sales by more than 6% in a year when the industry’s sales slumped.
  • Costco’s program’s biggest advantage over competitors is fixed prices, meaning customers don’t have to bargain when purchasing a car.

Costco’s car business is thriving, thanks in part to a perk that sets it apart from the competition.

On Tuesday, Costco said its auto program sold more than 520,000 vehicles last year, an increase of more than 6% over 2016 sales figures, during a year when total sales dropped across the auto industry.

Costco’s auto business has quietly skyrocketed over the past decade. Costco’s program sold roughly 200,000 cars in 2008.

Despite the growing business, Costco doesn’t make money on the auto sales.

The vehicles are sold through partnerships with more than 3,000 auto dealerships in the US, meaning that, technically, Costco itself does not sell the cars. Instead, the retailer uses the program to attract new members and maintain existing members’ interest.

Costco has one major perk that traditional car dealerships lack: fixed prices. That means customers can skip the bargaining and upselling often expected at those dealers.

“Costco members are at the forefront of everything we do,” Beth Chaponis, a Costco representative, said in a statement, describing the program, which launched in 1989, as an “exceptional and transparent car-buying experience.”

Costco points to the streamlined process as contributing to customer satisfaction. Costco surveys members who buy a car through the program, and, according to the company, more than 96% of those who responded gave it high marks for value, service, and overall experience.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.