Costco Wants to Sell You a Chevy

By Douglas A. McIntyre Published May 28, 6:43AM EDT

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Costco Wants to Sell You a Chevy — © Courtesy of Chevrolet

It is improbable that a huge discount warehouse company can help a car company that is desperate to find buyers. Yet, Costco Wholesale Corp. (NASDAQ: COST | COST Price Prediction) is doing just that. It has a new program to feed buyers to the Chevy division of General Motors Co. (NYSE: GM), one of the deeply wounded manufacturers that will lose tens of thousands of sales this year.

GM delivered almost 2.9 million cars, crossovers, sport utility vehicles and light trucks in the United States last year. Depending on the source, 10% to 20% of that level of deliveries could be lost this year. If there is a second wave of the pandemic later this year, the figure will be higher.

The Costco program allows its customers access to what it says are models that are already in high demand. The “Chevrolet Limited-Time Special” includes the Chevrolet Silverado, Tahoe and Suburban. The Silverado is among the best-selling vehicles in the United States, part of the huge demand for full-size pickups that has helped the competing Ford Motor Co.’s (NYSE: F) F-150 be the top-selling vehicle in decades.

The deals raise the question why GM would need a new sales channel for its popular products at all.

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Costco gets to offer its members something. It gives these members a $1,000 incentive to buy the models. This can be combined with discounts GM provides, which presumably makes the deals more attractive. Rick Borg, Costco Auto Program general manager, said, “The exclusive $1,000 incentive combined with the additional incentives publicly available represents a big savings opportunity for Costco members. We’re happy to deliver this exceptional value on these highly sought-after trucks and SUVs.”

It is hard to believe that the $1,000 is coming out of Costco’s pocket. Why would it? To make its members happy. People come to Costco to buy goods, from groceries to furniture, in bulk.

Who gets the better deal from the new partnership? It is almost certainly Costco.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.