"Costco also gets deals from major car companies to offer customers (which it calls its "members") large discounts. The program has some real benefit, as the average price of a new car in America is approaching $50,000. Members can currently get deals on the Cadillac, Chevrolet, GMC, Polestar, and Volvo brands. Depending on the model, discounts range between $1,000 and $2,000. The members receive certificates that they take to dealers."
"Presumably, while the deal is good for Costco, it is at least as good for the car companies. Cadillac falls into this category specifically. It operates in one of the most competitive segments of the car market: luxury cars. And it does not do very well. It sits well behind Lexus, Mercedes, and BMW in unit sales. It has not gained any ground in market share for decades."
"There are many reasons people think that Costco Wholesale Corp. ( NASDAQ: COST) is the best-run retailer in America. For example, it offers a $1.50 hot dog as a loss leader and has refused to raise its price. Costco has done the impossible. It makes billions of dollars by enticing people to shop in its stores. Costco also gets deals from major car companies to offer customers (which it calls its "members") large discounts."
Costco uses loss leaders and membership incentives to generate billions in sales and foot traffic. The company maintains low-priced offerings, such as a $1.50 hot dog, and secures exclusive vehicle discounts for members via manufacturer partnerships. Members can access certificates for discounts of $1,000–$2,000 on select Cadillac, Chevrolet, GMC, Polestar, and Volvo models through the Costco Auto Program. The new deals run until January 2. Cadillac operates in the highly competitive luxury segment and remains far behind Lexus, Mercedes, and BMW in unit sales and market share. Cadillac's narrow model lineup, focused on SUVs and crossovers with few sedans, limits its ability to match rivals that offer broader gasoline, electric, and hybrid options.
Read at 24/7 Wall St.
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