Cover Story: WAREHOUSE CLUBS
SPORT UTILITIES? AISLE 13
Karen Rezzelle was ready for something different when it came time to buy a new car. Dealers used to insist that her husband's name appear on all the ownership papers, even though she was writing out the check. After her divorce, Rezzelle found the experience even more infuriating. "Is money all you care about?" one salesman brashly inquired after she questioned him on price. But now, the 44-year-old surgical nurse says auto buying is a breeze, thanks to a service she found through her local PriceCostco Inc. warehouse club. "They do everything for you," she says.
Using the substantial purchasing power of its 10 million members, the retailer put together a network of more than 1,000 dealers located anywhere there's a PriceCostco store nearby. They sell virtually every car available, from Mercedes to Chevrolet. Dealers pay a monthly fee to be part of the network and agree to offer PriceCostco members prenegotiated, discounted prices that include options and average about $1,200 less than shoppers could typically get on their own.
The warehouse club sometimes has cars on display to promote its program, but customers have to buy at a showroom. PriceCostco does have a toehold in new-car sales. It recently began selling custom replicas of the 60s-era Cobra sports car from Milwaukee-based Excalibur Automobile Corp. for $47,650 in a few locations. So far, it has sold three.
Rezzelle picked up a brochure for the service at her local PriceCostco store. She had visited enough showrooms to know what car she wanted, so she called the toll-free number for the name of the nearest network dealer. Besides eliminating the stress of haggling, the service, which is free to PriceCostco members, saves time. "People want to have a very simple, fast, honest way to buy a car," says Walt Green, director of the company's eight-year-old auto program. "That's why there needs to be something like this."
The concept is catching on. Green says 30,900 vehicles were sold to members through the referral service in 1995, triple the number in 1990. Rezzelle's new vehicle was one of them. Last May, she bought a fully loaded Jeep Grand Cherokee in Merced, Calif. The cost: $29,900--$2,000 less than the best price she found on her own. With such savings, traditional auto dealers may soon find themselves on the endangered species list.BY LINDA HIMELSTEIN IN SAN FRANCISCO