GM wins conquests through Costco

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A promotion between General Motors and Costco's auto sales arm has the warehouse club's members kicking the tires on GM's full-sized pickups far more than in the past.

In addition, almost half of the Costco members who bought vehicles under the program so far became first-time owners of the GM brand they purchased, Costco Auto Program survey data reveals.

In November, the Chevrolet Silverado was the most-requested vehicle for dealership referrals by Costco members, says Gina Paolino, president of Costco Auto Program. The GMC Sierra was No. 4

That's good news for GM, whose market share for full-sized pickups slipped in recent months as a result of hefty incentives from Ford Motor Co. and Chrysler Group's Ram on their pickups. From January through September, the Silverado typically had ranked from No. 35 to No. 40 on the list of most-requested vehicles among Costco members, while the Sierra was in the No. 50 to No. 60 range.

Scott Gruwell, partner at Courtesy Chevrolet in Phoenix, says the popularity of pickups and the appeal of the Costco brand is a winning combination.

Costco conquests
A GM-Costco promotion that offers supplier pricing and a $500 Costco card has the retailer's members switching from other brands. The promotion runs through Jan. 2; data are as of Dec. 2.
Customers who registered for the program: 19,426
Customers who followed through with a vehicle purchase: 51%
Buyers who had planned to buy a non-GM vehicle: 45%
Of those, the brands they had expected to buy:

  • Ford: 32%

  • Toyota: 22%

  • Honda: 7%


Source: Costco Auto Program

"You have a trusted brand in Costco, and they have a reputation of wholesale prices and discount pricing," says Gruwell, whose dealership attributes sales of about 35 to 45 pickups to the current Costco program.

Costco Auto regularly offers prearranged prices on new and certified used vehicles for members through a network of more than 3,000 new-car dealerships. But 4,287 GM dealerships are participating in the special promotion, which is the third such partnership between GM and Costco.

As of Jan. 1, GM had 4,355 dealerships, according to the annual Automotive News dealership census.

The promotion, which began Oct. 15 and ends Jan. 2, allows Costco members to buy 14 Buick, Chevrolet, GMC and, for the first time, Cadillac vehicles through franchised dealers at prices that are generally equal to prices that GM offers its suppliers' employees.

Also new to the program is the Chevy Volt plug-in hybrid. Costco received about 1,300 referral requests from its members for the Volt, up from what had been about 280 per month earlier this year.

Costco's program works like this:

Members contact Costco to register, select a vehicle and locate a participating dealer. They are given authorization and personal identification numbers to provide to the dealer when they make their purchases.

Costco members who purchase eligible vehicles and complete a survey about their purchase also received a $500 Costco Cash Card. That's on top of any other GM rebates and incentives for which they are eligible.

Those surveys allow Costco to gather data about members' purchases and intentions.

For example, the survey, covering sales through Dec. 2, shows that 49 percent of the program's buyers were newcomers to the GM brand of vehicle they purchased, and 45 percent had been planning to purchase a brand other than the one they eventually bought.

Among the group that purchased a different brand than originally intended, 32 percent had been planning to buy a Ford-brand vehicle; 22 percent a Toyota and 7 percent a Honda. Of 19,246 Costco members who have registered, 51 percent had completed the purchase process.

You can reach Arlena Sawyers at asawyers@crain.com.


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