GM’s Costco-Driven Sales Jump on Strength of Pick-Ups and Crossovers

Costco (NASDAQ: COST) sells cars for GM (NYSE: GM) — an odd combination of big box discount retailer and huge auto manufacturer. The marriage, however, has worked recently. As the advance in U.S. car sales slows, any conduit for new customers is welcome for the nation’s largest auto company.

The program is not one-sided in GM’s favor. It also helps Costco build its business:

Costco Auto Program today (November 11) announced Costco members showed a strong interest in the crossover and truck segments in the first month of the General Motors Holiday Sales Event. These segments made up 70 percent of the vehicles purchased through Oct. 31, 2016. Additionally, the company reported that October included the highest registration day in the history of Costco Auto Program promotions with more than 4,200 Costco members registering for the offer on Oct. 19, 2016, alone. Prior to this, the highest number of registrations received in one day was during the 2015 promotion and it was less than half the amount of the Oct. 19, 2016, registrations.

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And,

Costco members requested Chevrolet and GMC models most often. The Silverado continues to be the most popular vehicle during the offer, as it was during past Holiday Sales Events, representing 9.1 percent of vehicle requests. A close second is the GMC Acadia at 8.4 percent. The GMC Sierra comes in third at 6.5 percent. The Chevrolet Tahoe received 5.5 percent, followed by the Chevrolet Equinox, with 5.1 percent of vehicle requests.

Chevy is GM’s largest division. The Silverado is the second best-selling vehicle in America most years, trailing only the Ford (NYSE: F) F-150.

Most industry analysts believe American car sales will peak this year, after advances each year back to 2009. This may be due to the economy, or the fact that so many Americans have cars less than five years old that the new car market is saturated. Whatever the reason, the competition among the largest manufacturers will turn to market share. Often, that means a wave of discounts, which undermine profitability.

The Costco program is not huge, but GM will need all the help it can get.

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