My American Express Car Buying Service Experience: Amex vs. Carsdirect.com and Costco

So recently I was in the market for a new car. Now, I know that many will argue the merits of only buying used cars because of the steep and immediate depreciation hit you take the minute you leave the lot with a new car. Well, in general, I prefer to buy new because I don’t trust my ability to evaluate the mechanical condition of a used car. Plus, it’s just a lot easier to comparison shop for new cars. I also keep my cars for a long time, so the depreciation is less of an issue.

Another problem I face when buying a car is that I hate haggling. Personally, I’d rather pay a slight premium for a more convenient transaction. Which is why I decided to explore the subject of this post: a review and comparison of a few of the “no-haggle” price car purchase programs on the market.

Carsdirect.com
The most established online program seems to be from Carsdirect.com. On their website, you select the make, model and options you want and they will quote you a price. For the car I had picked (a 2010 model), they quoted me a price that was $800 below MSRP but roughly $2600 above invoice, excluding incentives. You could then get another offer from a dealer by filling out your contact information, but since this initial price they gave me was pretty bad, I didn’t bother.

Costco Auto Program
Since I’m a member, I decided to try the Costco car buying program next. After specifying the details of the car I was interested in and supplying my contact information, Costco matched me with a local dealer that participates in their program. The dealer quickly got in touch with me to set up an appointment, but claimed it was their policy to not give prices over the phone. Once I got into the dealership, the price I was quoted was about $1150 over invoice. The price, however, didn’t seem firm and was subject to negotiation. Not ready to make a decision at that point, I decided to do some more legwork.

Amex Auto Purchasing Program
It was by complete accident that I discovered that American Express also had its own car purchasing program. The service is actually run by a company called Zag. Zag partners with a number of brands and organizations, such as USAA, Capital One, and Amex, among others, to provide its service to members of the participating groups.

The online interface for Amex’s program seemed an immediate improvement over the others I had tried so far. You can configure your car with the options you want and get prices from multiple participating dealerships (relative to invoice) without entering your contact information. Based solely on zip code, I was matched with 3 dealerships, and among them, the best price was for $400 above invoice.

Thinking that this sounded pretty good but slightly skeptical that I might be missing something, I called up the Amex car buying people who assured me that the dealer was obligated to give me this pricing and there weren’t any hidden gotchas. If the dealer didn’t have the exact car configured the way I wanted, they would still honor the price, relative to invoice, of other cars they did have in stock.

Once I had filled in my contact details, the dealer quickly got in touch with me. They, of course, wanted me to come into the dealership, but I saw no point unless I was ready to do a deal. I was initially surprised that they made no mention of the car buying program. Instead, it seemed like I was a normal customer who had contacted them through their web site. What ended up happening was we negotiated a price over the phone. Eventually I was offered a price of $750 under invoice (even before manufacturer rebates and incentives). Based on what I had been reading on the Edmunds.com forums, this was an excellent price and a good deal for this car right now.

Were there any surprises? Not really. When I showed up at the dealership, the itemized invoice they showed me was roughly $550 more than the Edmunds invoice number since it included local advertising and marketing fees. Either way, I felt it was still a fair deal.

One of the other side benefits of the American Express program is that dealers are obligated to allow you to charge a minimum of $2,000 of the purchase price to your credit card. In my case, I felt like I was getting a good enough of a deal as it was, so I didn’t push for it.

Lessons learned
There’s still a lot of haggling involved, even when using these so-called “no-haggle” services, if you’re interested in getting the best deal. Then again, getting the absolute best deal is not really the point of these services. They are more about getting a fair deal with a minimum of fuss. For the more ambitious, they can be used as a starting point for negotiating with other dealers.

Are my results typical? I’m guessing not. The end result is probably mostly dependent the particular dealer(s) that you are referred to.

I personally liked the Amex program because it allowed me to get quotes from multiple dealers up front without commitment or even entering any personal data. Assuming it’s still around in the future, I wouldn’t hesitate to use it again.

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10 comments

  • Jody Porter

    Re: American Express Car buying service
    I also had an excellent experience with AE and recently bought vehicles with Costco (a Toyota) and with AE (Lexus). The service was good from both but only 1 of 3 dealers from each service actually contacted me with a price by e-mail. I’d use the AE for a higher end vehicle and make sure you have NOT visited the dealer prior to using the service as if you have met a sales person the internet price was not applicable. The price quoted was good for 3 days only and we put $5,000 down with AE. The Costco deal was also good and honest. The other dealers who contacted me were a waste of time so you have to ignore sales pitches and stick to the exact vehicle you want and get a price the first time.

  • Rich

    Your description of your buying experience seems “spot on” to me, basaed on several “fleet department” purchases over the last 18 years.

    An additional comment with respect to used cars: I belive that off-lease “certified preowned vehicles” are a reasonably good option. Yes, there is more legwork involved, but the savings are also substantial if you are targeting a higher-end car.

  • amir

    Thanx for the thorough review. I am in a quagmire b/c of different dealers telling me different things and then not following thru. AAA will give you a bare minimum price sheet for $12-14. Useful tool. The dealers as a whole make an enjoyable experience miserable. In their blood I guess. I too liked the AMEX site better. Got fair offers. The one which undercut the rest, does not even reply to emails.

  • DJ

    My experience could not have been more different with AMEX. I was given two dealerships that participated in their program. Both contacted me via email, and then, phone. I was trying to buy an Acura TL AWD. One dealership said they didn’t have the color I wanted. Even though it was early in the model year (2010), they didn’t even make an attempt to try to find the color I wanted, either….not even wanting to see what they had coming in for the immediate future.

    Further, they said the AMEX pricing was wrong. Even though AMEX said the dealership was required to accept the pricing, the dealership said they would not.

    Won’t be using AMEX again (nor the dealership who participates in their program).

  • AM

    I recently had the displeasure of trying to buy a new car myself and not go thru a professional independent buyer service which I had utilized in the past. I went thru AMEX program first. Overall was not happy with it. Similar to the car buying websites listed above, they are in agreement with certain dealers ie it is not a regional or statewide search. I got three choices. The two whom I had to call or go to to see if they will offer lower price than the one with the guaranteed lowest price. One wanted to sell above that AMEX price and was close to MSRP. The other one said he will sell at invoice but then never followed up and would not return calls or emails. The guareanteed lowest price one in one way or another would not communicate a firm answer to my question about factory allocations (see below) and eventually would not even return calls or emails.I also found out that the listed AMEX price has more add-ons in the form of port fees and other fees which are not listed or included in the AMEX price. In addition, if the car you want is in low supply or if you have to wait till the factory allows a dealer to order it based on how much they sold the previous quarter (called allocation), the dealers will not give you a straight answer re delivery time. SO one month got wasted and after giving up on AMEX and on my own, I ended up using the AAA car buying program. It was very easy. Very straightforward. Haggle free. Was not the lowest price out there but the whole point is not to deal with dealers directly if avoidable. In the long run, the buying process can be painful or easy and the extra bucks for less pain is worth it. Think of it as novocaine free dentistry versus a professional dental practice.

  • Mike

    AM- after reading your story I am quite puzzled. Both the AAA and AMEX programs are run by the same company Zag, your results should have been the same with both.

  • AM

    I am not sure but I think not anymore. Each gave me a different dealer. 3 in case of AMEX. 1 in case of AAA. I talked to ZAG too ie they called me after I filed a complaint with AMEX. The AAA dealer was not part of them. Even if they are part of the same network, the experience with them was as different as night and day. Next time, I will use either AAA or a professional shopping service which charges a flat fee. I had used them in thepast and regret not doing so this time. I stuck with the AAA offer, albeit probably higher than what the professional program could have got me, since there was an issue with delivery time and allocation from factory to dealers.

  • joseph

    I used AMEX to purchase a 2010 MB E550 and got a price THOUSANDS better than available locally. Although the dealer I purchased from was in Delaware, over 200 miles away, they delivered the car tome at no charge, on a flatbed and covered. Also this vehicle had to be built to spec in Germany since not a one existed throughout America exactly as I wanted it.

    I could not have been more satisfied with both the service (AMEX/ZAG) and the dealer, Euro Motorcars in Bethesda.

  • RK

    AM – AAA, AMEX, Bank Of America and others all use ZAG.com. I just configured the exact same car through AAA, AMEX and BoA and they all gave me the same three prices and dealers.

    My experience simply is this service may work if they have your car in stock. Zag.com sent me the same three dealers, regardless of AAA, Amex, BoA, and none had the car in stock. I simply would prefer a list of particpant Zag.com dealers within 150 miles of me so I can call them to find out whether they even have the car in stock.

  • testboomzoom

    Hard to discern from your article without the cold hard numbers and make/model. That being said, I always use Consumer Reports rule of thumb, which I believe is $300-$500 over invoice — with the caveat that (1) the dealer makes more than that as a profit margin (including at least the holdback); (2) there may be other incentives available; and (3) depending on whether a car is “hot” or “not,” that $300-$500 may be more or less, depending on the real demand out there.

    Also a factor is whether the dealer is a jerk who just won’t really negotiate (not that they are obligated to, of course). In ’09 I had a quote of $20,500 + tax/title/license from TWO dealers for an ’09 Honda Accord EX. Other dealers wouldn’t touch that price, and one goof repeatedly tried to get me to agree to prices of $23,500 and $22,500, knowing full well I had valid quotes $3000 and $2000 lower! I wound up asking him if anyone who agreed to those prices “got kissed” to go along with what else they were doing to the customer.

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