On Saturday, the budget retailer announced it is once again partnering with General Motors for its popular Holiday Sales Event, which will last from October 1 to January 3.
Last year, 58,000 vehicles were sold during the promotion, a 34% increase over 2014 sales during the promotion. More than half of the people who purchased vehicles through the event said they switched to a General Motors brand such as Chevrolet, Buick or Cadillac because of the promotion.
All in all, Costco sold 465,000 vehicles through partnerships with auto dealers in 2015. Technically, Costco itself does not sell the cars, and doesn't make any money on the auto sales, instead using the program as a way to attract new members and maintain existing members' interest.
Despite this, Costco is not far behind the No. 1 auto retailer in the U.S., AutoNation, which sold 533,000 vehicles in 2014.
Costco has one major perk that traditional car dealerships lack: fixed prices. That means customers can skip the bargaining and upselling that is expected at traditional auto dealers.
This streamlined process means greater customer satisfaction. Costco surveys every member who buys a car though the program. According to the company, more than 96% of members who responded to the survey gave the program high marks for value, service and overall experience.
"Seeing the continued success of the Holiday Sales Event with each year, GM is pleased to offer the largest selection of vehicles to date for Costco members that will make the event just as popular, if not more so, than last year's event," GM spokesperson Jim Cain said in a statement.
Costco launched its auto program in 1989. Today, the retailer sells cars through more than 3,000 dealerships to Costco members across the U.S.
You can’t eat at San Francisco’s Pythagoras Pizza: Each $20 pie is available for delivery only. The model keeps costs down, but when the shop’s popularity skyrocketed in 2015, founder Evan Kuo had a problem. “How do you staff to endure waves of two- to three-times-demand spikes?” he says. After all, he needs way more drivers (and cars) for lunch and dinner, but he can’t afford to own a huge fleet that goes unused during most hours.
In 2015, the car giant launched UberRush, which is essentially a messenger service that uses Uber drivers. It partnered with e-commerce platform Shopify and is available in San Francisco, New York and Chicago, and has become a favorite tool of businesses that deliver. Today, half of Kuo’s pizzas arrive via UberRush. “Even if your forecasting model is 80 percent accurate, you’re still either overstaffing by 20 percent or underserving by 20 percent,” Kuo says. “That volatility can be frustrating and really costly.”
In using Uber this way, Kuo is joining an entrepreneurial crowd: Like cord cutters who stop buying cable, a movement of car cutters are exploring life without auto ownership. Many services are helping this along. ReachNow is in beta testing in the Seattle area; it’s like Zipcar, in that members can rent cars in small chunks of time rather than being forced to pay for the whole day. (Bonus: ReachNow loans only BMWs and Minis, so your makeshift fleet has a built-in air of success.) Similarly, Silvercar rents on-demand Audis for just $59 a day, proving that business folks are still willing to drive themselves as long as they can do it in style.
Automakers themselves are exploring how to capitalize on the car-sharing game: Toyota recently invested in Uber and made a deal to offer drivers special lease rates on their cars; Volkswagen sunk $300 million into Gett, a New York City-focused Uber rival; and GM bought a $500 million chunk of Lyft and will pilot test autonomous-driving Chevy Bolt taxis in 2017. Not to be outdone, FCA inked a deal with Google parent Alphabet to be a supplier of vehicles to Google’s well-publicized driverless system.