When you apply one of these incentives, what is the flow of money and whose pocket does the money actually come out of? Curious how these arrangements work.
Captive bank for manufacturer.
I think influencer campaigns are funded by an agency… of course the agency is eventually paid by the manufacturer but it’s one of the few times the spiff comes by way of external subsidy instead of from automaker sales/pricing or captive financing subvention.
So let’s say you have a $5k Costco Audi certificate. Dealer takes it and discounts $5k off ACC. So VW/Audi Financial Services captive financing unit buys the car from the dealer at the ACC, then funds the lease? And then the dealer goes and collects the $5k from Costco, who in turn was paid by Audi?
More complicated as the funds are paid via multiple sources, but yes. They don’t get ‘paid’ by audi as they don’t own the car (Dealers floor plan everything), but audi lets them ‘purchase it’ at the lesser amount.
Is there basically some marketing arrangement where Audi partners with Costco to offer the Auto program?
I guess I am wondering why Audi doesn’t just offer the incentive directly instead of going through Costco.
I can’t speak to exactly what is happening right now, but when I worked implementing a “buy cars from Costco” initiative a decade ago, the crux of the agreement was more of a business partnership than it was a source of funds to close deals.
State franchise laws prohibit Costco from becoming the actual storefront to sell or service vehicles. So you should think of what you are describing as a “Costco” incentive to be more of a lead-generation tool than anything else.
Automakers that partner with Costco can rely on some form of marketing support to get advertising out to their customer base. And in return, the automaker carves out incentives in a program to subsidize sales.
The goal of the partnership is for Costco to feel like it’s providing value to its members; while simultaneously giving the sales channel incentives support. Most of the time, the incentives from this type of program do not stack. So someone with a Costco membership, Amex membership, AAA membership, USAA membership, etc will only see one common incentive.
IIRC these incentives will differ by region, so it wasn’t always the case that it was a nationwide flat incentive for all “members”.
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