Members of warehouse club giant Costco can now enjoy a 15 percent discount on labor, accessories and parts when they have automobiles serviced at participating vehicle dealerships. Jim Newbery, executive vice president of the company's auto program, stated that this program provides dealers with access to the buying power of the 44 million members who purchased more than 250,000 new and certified used automobiles in 2010 through Costco.
Newbery said that the service program is an adjunct to the certified pre-owned business. This program started its national rollout in May. Newberry further stated that those vehicles from the get-go have mileage on them, thus, it isn’t just warranty work. "There is immediate business," he added. He further explained that when the vehicles are new or used, the accessories business prosper. The members come first but Costco wants the dealer to increase his revenue opportunity, he added.
For Jeff Brandfon, the owner of Brandfon Honda in Branford, Conn., the program is anticipated to generate 500 to 600 customer-pay visits annually to his service department as well as some new and used automobile sales. He signed up for the program last summer and has been a Costco participating dealer for more than five years.
On behalf of its members, the warehouse club giant has arranged no-haggle, new-vehicle prices with cooperating dealerships since 1989. In 2008, the company added factory-certified used automobiles to the program. Its auto program involves around 2,500 dealerships, around half of which participate in the service and parts discount program, which Costco piloted for two years beginning late 2008.
Newbery reveals that around 200 cooperating dealerships took part in the pilot. The company also added dealerships and has signed up 1,200. By the end of 2012, it expects to sign up the rest of its 2,500 participating dealerships. [source: Autonews]