Beginning October 2 and ending January 4, Costco Wholesale Corp. (NASDAQ: COST) and General Motors Co. (NYSE: GM) sponsored a promotion for Costco members who wanted to purchase a new GM car. Sales totaled approximately 58,000 GM vehicles for the three-month promotion, up 34% year over year and well above Costco’s estimated 20% increase.
The offer featured GM supplier pricing and included all qualifying manufacturer rebates and incentives on a selection of vehicles, including trucks, sport utility vehicles and luxury and fuel-efficient models. Buyers also received a $300 or $700 Costco cash card for completing a Costco member satisfaction survey.
Customers were also asked if the promotion was a “deciding factor” in their purchase of a GM car instead of another brand. More than half (53%) said it was, and GM took the most sales from Ford Motor Co. (NYSE: F). Some 32% of the GM buyers switched from Ford to GM cars. That’s about 18,650 fewer Ford cars sold in the three-month period. Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC) lost 14% and 7% of sales, respectively.If Costco sold nothing but cars it would be the largest new car dealer in the United States. In 2015, the company sold more than 465,000 vehicles. AutoNation Inc. (NYSE: AN) is the nation’s largest car dealer, and it sold 343,753 new vehicles in 2015, a 5% increase year over year. Costco’s year-over-year increase in new vehicle sales totaled 16.8%.
Written by Paul Ausick of 24/7 Wall Street
(Source: 24/7 Wall Street)