Costco Rises to the #2 Spot For Automotive Sales

August 3, 2015

If you don’t know by now, Costco just became the second largest automotive retailer in the good ole US of A.  With almost 400,000 vehicles sold in 2014, Costco is creeping up on No. 1 auto dealer AutoNation that sold 533,000 according to Bloomberg. How did this happen?  Do they have a call center that contacts customers?  Are they spending excessive amounts of money on SEO, SEM, Pay Per Click, Retargeting, Pre-Roll Video, etc., etc. to attract customers to their automotive broker service?  Nope! So what's the answer to their undeniable success? Fixed prices.

We've seen study after study that explains how the industry is changing. Each day it seems like a new trend or a new statistic. Yet one thing stays consistent. Consumers are adapting the way they buy cars. Shifting consumer attitudes have resulted in success for companies like Costco and CarMax while other car dealers have suffered from a diminished level of trust. No haggling policies have shown to succeed in the new consumer's mindset, and many buyers have reported this leading to less anxiety during the process.

Consumers are looking for ways around dealing with the traditional car dealership "process" of buying a car, as seen by the rise of services like TrueCar. They just want the quickest way to the best price for the best value. By the end of last year, nearly 65% of car buyers said they used sites like TrueCar to validate a vehicle's price in the market.

“Customers know more going in. … They don’t want to feel like they got a bad deal,” said Chris Sutton, vice president of auto retail for J.D. Power and Associates. Services such as Costco Auto Program “help provide customers with that confidence.”

What can we do?

The Costco Auto Program business model caters to the rising intelligence of the average buyer, and helps make vehicle purchases smoother for customers and dealers. To replicate this process in a dealership, two things need to happen. You need to validate the price you've set for your vehicle online and then continue the justification process throughout the entire sales cycle. Provide customers with an educational understanding of each vehicle's worth and then stick to it.

“Whether it is third-party sites or buying services, at a minimum they’re providing a level of expectation or limitation on prices,” Sutton said. “I think we’ll continue to see more transparency in pricing.”

To learn how MAXDigital's Marketing & Sales Platform is validating price for consumers in dealerships across the U.S. visit or call (888) 841-0884.