The New Deal(er) -- Cars at Costco

The article clipped below from the blog gas2.0 illustrates a logical next big step forward for superstores and the latest crack in the foundation of the car dealership business model. This has some big brand implications.

The plight of the the Big 3 automakers overshadows an exciting volatility in the US auto market. As trust in your father's car brands erodes, new ones -- domestic and foreign -- are making a serious run at the mainstream. They're riding a wave of new car types (crossover, ultra-compact) and power plants (electric/hybrid/even compressed natural gas). In a way, the auto industry is returning to the entrepreneurial energy of its pre-GM roots. Many of the emerging brands, as with the Chinese brand the article describes, are as yet unknown to the US market.

But in the superstores they have a powerful channel. In the logic suggested by this clip, Costco (or Wallmart, Target, etc.) emerges as the trusted brand that draws consumers to cars, as opposed to the vehicle brand, which at one time was primarily responsible for imparting this value. It'll be interesting to see the coming segmentation of vehicle types/brands within store brands.

Car dealerships are closing everywhere, and of course car dealers are down there with lawyers at the bottom of the trustworthy list. By contrast, superstores are on a 20+ year run of changing consumer's expectations about the everyday shopping experience. Is anyone still surprised to find above-ground swimming pools being sold under the same roof with books and vegetables? This means that America is trusting Costco, Walmart, Meier and the rest to sell us all sorts of products even though (or maybe because?) nobody working in the store knows anything about them.

Back to the cars: Befitting the times, emerging models are mainly cheap, tiny, cubist. In retail terms, that means easy to stock. They're also styled with that aura of freshness, fun and disposability that make them easy to merchandise. It's easy to see how the single display car one already finds on the premises at Costco could transition to an auto department with cute little whizbangs ready to roll down the aisle and into the bed of the family pickup along with the soda, franks, and office furniture.

clipped from gas2.org Chinese Electric Cars Coming To Costco, Wal-Mart Written by Jerry James Stone Published on March 31st, 2009. Posted in Electric Cars (EVs), International issues While seeing Chinese cars on display at the Detroit Auto Show has become somewhat common these past few years, there is one place they were hardly expected: Costco! Yes, the big-box discount store Costco could be selling the Chinese-designed and Mexican-built vehicles says one auto exec. The CEO of GS Motors — Kathleen Ligocki — told the Hybrid Cars website that she thinks the US will follow in Mexico’s footsteps. GS Motors sold 4,000 China-made vehicles in Mexico last year at…Costco and Wal-Mart.