Fixed Ops Journal - February 2018 - 29

FIXED OPS JOURNAL

COSTCO
continued from Page 28

independent garage, and print a coupon for a
15 percent discount on service and parts, with
a maximum savings of $500.
The offer's exclusions are crafted to avoid
pinching dealerships on competitively priced
services. Discounts are not available on oil
changes, state-mandated inspections or airbag repairs.
And no discount on tires, though for a different reason, Costco's Borg notes. "We sell a fair
amount of tires ourselves," he says.
Victory Toyota has been in Costco's vehicle
buying program for more than a decade. But
the dealership initially passed when Costco
added discount parts and service coupons to
the auto program in 2011.
Like most other franchised dealerships, Victory already heavily promoted parts and service with its own discount coupons and merchandising.
"We didn't start participating immediately
when Costco added service," says George
Czechowski, the dealership's general sales
manager.
Many other dealerships that took part in the
sales program also passed on the service expansion. Yet Costco's surveys of its members
showed they also wanted to save on reliable service and repairs. So the retailer "devoted more
resources to the service program," Borg says.

"It's a win-win-win. It's
good for our members,
good for dealers and
good for Costco because
it helps us retain our
members."

Costco limits its auto purchasing program to
franchised dealerships that it has extensively
vetted and that agree to uphold the retailer's
quality standards.
But Costco now includes independent repair centers in the service and parts program.
"The first few years, we just had automaker
franchises," Borg says, "but we're trying to
backfill to get brands not represented by franchises in" metropolitan areas.
Costco maintains stringent guidelines for
participants in the program, Borg adds.
"We check their online reputation, check
their social networks," he says. "We want them
to have the ability to make a range of repairs,
including alignments. They must have a minimum of six bays, restrooms, a lounge and a
great customer service attitude."
Costco added a full-time staff member in
2014 to recruit more independent shops, as
well as dealerships in the vehicle purchasing
program that didn't initially add service and
parts. The company hired three more recruiters by 2016.

RICK BORG, Costco

Club rules
Key features of Costco's program for
service and parts sales
 Benefits for Costco members at
1,400 participating dealerships and
independent garages
 15% discount on service and parts
purchases
 Applies to all member vehicles
 Excludes oil changes, tires, airbags,
state inspections
Source: Costco Auto Program

Casey Ivins, a regional manager of field staff
for Costco, says his team trains dealership service and parts personnel in the program's features and provides ongoing support. Five out

High standards

of six dealerships that take part in the buying
program now are in the service program as
well, Ivins adds.

No charge
Beyond nominal fees to cover promotional
materials, Costco does not charge participants in the service program or share revenue.
Instead, the company says its efforts are about
adding services that keep its members happy.
Borg says company surveys suggest that 93
percent of Costco members consider the auto
programs a valued service.
Victory Toyota says the program attracts
new customers who tend to boost the dealership's customer satisfaction scores in factory
surveys.
"And some of those service customers buy
new vehicles another time," Carter says. "It
happens frequently.
"Like the old saying, the front end makes the
first sale, service sells the next three." 

FEBRUARY 2018

PAGE 29

Table of Contents for the Digital Edition of Fixed Ops Journal - February 2018