POSTED: Friday, November 4, 2011 - 2:26pm
UPDATED: Thursday, January 12, 2012 - 1:43pm
NBC NATIONAL NEWS — The car lot isn't always the first place people shop for cars these days.
Some begin their search at a computer screen, or even in the front of their local warehouse store.
Most Costco stores greet customers with brand new cars parked in front of the stores.
"Most warehouses will have a car on display, and those cars rotate on a weekly basis. So, most people take notice of that," says Costco's Rick Borg.
But are they buying?
Everyone in the car business has had a tough couple of years, but the Costco auto program is picking up.
"Actually this year, year to date through the first ten months of the year, our program and members accessing our program is up almost 19 percent," Borg says.
Costco does not actually sell you the car.
They negotiate the price and then send you to a local dealer.
"We're gonna refer members to a participating dealer that has agreed to give a great value to Costco members in the purchase price of their vehicle, as well as the process they go through to purchase that vehicle," Borg explains.
Dealers compete on price to be part of the Costco auto program, but now the program is going straight to the manufacturer and working a pricing deal directly with General Motors.
"It's GM Preferred Pricing, and basically it's the pricing that they give to their supplier," Borg says.
The customer still ends up going to a local dealership, but on top of the discount, Costco is giving car owners a $500 cash card.
How do the dealers feel about Costco as a middleman?
"It's just one more piece of a car-buying puzzle, along with shopping on the internet, that has just changed the way folks buy cars," says the New Car Dealers Association's Lance Roberts.
The Costco program sells thousands of cars every year, from low-priced economy to luxury cars.