Costco is becoming a huge threat to car dealerships by offering one huge perk

Costco carsReutersPeople fill up their tanks with gasoline at a Costco Gas Station in Carlsbad, California

Costco is becoming a huge force in the auto world.

The warehouse retailer sold 400,000 vehicles in 2014, twice as many as in 2008, Bloomberg Business reports.

“Without fanfare, the membership-only merchant better known for selling flatscreen TVs and jumbo-size boxes of cereal has pulled within spitting distance of No.‚ÄČ1. car retailer AutoNation, which sold 533,000 vehicles last year,” according to Bloomberg.

Customers prefer Costco over traditional car dealerships for one reason: prices are fixed.

This means there’s none of the notorious haggling or upselling of traditional auto dealers. Many buyers told Bloomberg this results in less anxiety during the process.

Costco also offers deals: one of the most popular models, the 2015 Toyota Highlander, is offered for $US4000 below the recommended manufacturers’ price. It works with an auto-buying service to negotiate the lowest prices.

The retailer has a huge advantage over traditional car dealerships: it doesn’t need to make money from the cars it sells.

Because of other income streams like membership fees, groceries, gas, and apparel, Costco can afford to sell its cars for cheaper than competitors.

The benefit of buying a car could help Costco get new members.

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