Costco will be expanding Member-Only Incentives, unlike the Holiday Sales Event, Member-Only Incentives are 60 days in length and can be targeted by model and/or region. They can also occur more frequently throughout the year.
“We hope to expand sales programs, having multiple OEMs to pinpoint added incentives just for Costco members,” Rick Borg, executive vice president of program operations at Affinity and Costco Auto, told Auto Finance News.
The increase in sales that coincides with the OEM partnerships is significant enough that Costco plans to increase member-only incentives.
“There is an increase in sales, specifically for General Motors products and all four brands under the GM flag,” said Borg. “Last year, from the third quarter to the fourth quarter, our overall sales went up over 85% through the promotion.”
This increase is substantial, but for GM, which offers cash incentives during the program, this figure balloons. Last year, GM sales shot up “north of 900%” from third quarter to fourth quarter, Borg said.
During the holiday sales event last year approximately 101,000 units were sold. The event seems to bring out a certain customer type.
“You’ve got a quality demographic that’s ready and able to purchase or lease,” Borg said.
Because the OEM partnerships are so successful, Borg says Costco Auto is looking to expand the model to several other brands in 2019.
“A member can go to a participating dealer for a specific manufacturer and receive an additional cash incentive towards that transaction price for a specific model,” Borg said.
In a two-month pilot program with Subaru last year, members were referred to dealers, and the OEM would sponsor an additional discount of $500 to $750, depending on the model, off the purchase price. Borg would not disclose the number of units sold during the pilot nor which OEMs might be added to the program next year.
“Not all manufacturers are able to do something as widespread and as large [number of discounts] as we’re doing with GM, but it still gives the manufacturer an ability to tap the potential of the Costco membership exclusively and spur sales,” he said.
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