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During the Covid-19 pandemic, child care took center stage as day cares shuttered, schools went remote and parents attempted to juggle their children with their jobs.
A shortage of workers and available slots for children has weighed on the sector since.
The nation’s infant-toddler child care crisis costs the U.S. an estimated $122 billion in lost earnings, productivity and revenue every year, according to projections from advocacy group ReadyNation.

Vadym Buinov | Moment | Getty Images

The Covid-19 pandemic brought to the surface both cracks and resilience in the American economy, with child care taking center stage as day cares shuttered, schools went remote and parents attempted to juggle their children with their jobs.
While employment in the child care sector has made a post-pandemic return to baseline, according to the latest data from the Bureau of Labor Statistics, a shortage of workers and available slots for children in some areas is weighing on the sector.

Costs are also going up for families. A February report from Bank of America showed costs for families increased between 15% and nearly 30% in terms of the average child care payment per household, year on year, during the fourth quarter of 2023. The largest increase was seen among households with average incomes of between $100,000 and $250,000 annually.
Policy advocates argue that child care, including for infants and toddlers, is an economic issue that affects all Americans, not just those with young kids.
Billions in stabilization funds from the American Rescue Plan Act earmarked for the child care sector expired last fall, which could lead to increased costs for families or centers closing their doors.
ReadyNation, an advocacy group of more than 2,000 business executives, lobbies in support of policies and programs at both state and federal levels that support a strong workforce and economy, including child care.
The group released a report in 2023 that found the nation’s infant-toddler child care crisis costs the U.S. an estimated $122 billion in lost earnings, productivity and revenue every year. That is up from $57 billion in 2018, before the pandemic exposed and exacerbated holes in the system for working families and the companies that rely on them.

ReadyNation’s study found a combination of “Covid-19 and insufficient policy action have now significantly worsened the crisis.”
“All taxpayers are impacted by this. We need to realize that the loss of taxpayers is $1,470 every year per working parent because of lower income taxes being paid and lower sales taxes because of lack of purchasing power from people that are unemployed,” said Nancy Fishman, national director of ReadyNation.
Part of the nationwide solution is supporting what the group calls the “workforce behind the workforce” — early child care providers.
“Supporting the early childhood workforce could include such things as making sure child care providers have access to benefits. We all know how much benefits matter, whether it’s health-care benefits, or the ability for them to find high-quality child care for their own children,” Fishman told CNBC. “Programs that support additional training and education for child care providers are important as well.”

Solutions in the Golden State

In California alone, the economic toll including lost earnings, productivity and revenue is an estimated $17 billion, ReadyNation projects. That is higher than any other state in the country, according to the group’s estimates.
While child care jobs in the state have rebounded to a 2020 baseline as of this spring, according to analysis from the Center for the Study of Child Care Employment, other states have seen larger job gains post-pandemic.
Some child care workers in California organized in 2019, with the Child Care Providers United, which today represents more than 40,000 home-based licensed and license-exempt, friends and family, child care providers. The providers are a part of the state subsidy program in California, and the union is a partnership of SEIU Locals 99 and 521, as well as UDW/AFSCME Local 3930.
The group won its first contract in 2021 and gained access to first-in-the-nation retirement benefits.
The union says child care providers currently get reimbursed at a percentage of what it costs them to provide care in the state. Average child care provider pay is $7 to $10 an hour, with many providers reporting no take-home pay, it said.
Providers are currently advocating through the state budget process to be reimbursed for the full cost of providing care to create more dignity in their work, keep providers open and attract new providers to the workforce.
Deborah Corley-Marzett operates an in-home center for subsidized care in Bakersfield, California. She told CNBC she would like to hire more staff to help support her and the children, but it is difficult to find the right fit and offer competing wages in this environment. Low-wage workers in the state’s fast-food sector, for example, just secured a historic $20 an hour minimum wage, pressuring other sectors to keep up.
“I have a staff shortage problem. I literally can’t afford to hire someone to come in and work in the mornings with me right now. I can’t afford it,” Corley-Marzett said. “I don’t have enough children right now. But I can’t physically take on any more children.”
Lawmakers argue progress has been made, but there is more work to do. State Senator Nancy Skinner, a Democrat representing parts of the Bay Area and chair of the California Women’s Caucus, said the group continues to prioritize early child care and education. The group advocated for a $2 billion increase in the state’s spending over the course of the past two years toward early care and education, for a total of $6.5 billion.
The Caucus’ current focus is maintaining steady rate reimbursement rates for child care providers as the state stares down a budget deficit.
“We have low unemployment, but many sectors of the economy are looking for workers,” Skinner told CNBC. “If your family is in a situation where you can’t go to work because you don’t have adequate child care, or you can’t afford child care, then you cannot fulfill that job that’s sitting there, vacant and waiting for you.”

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As the Men’s T20 Cricket World Cup, co-hosted by the U.S. for the first time, ramps up, investors have pumped nearly a billion dollars into building the sport in America.
Microsoft CEO Satya Nadella and Adobe CEO Shantanu Narayen are among the executives investing in the new U.S. professional league, Major League Cricket.
“What gets me excited is seeing if cricket can become a mainstream sport in the U.S.,” said venture capitalist Soma Somasegar, who with Nadella is a key owner of Seattle’s cricket team, the Orcas.

Cricket may not be as popular a sport in the U.S. as elsewhere in the world, but some high-profile CEOs and investors are trying to change that.
As the Men’s T20 Cricket World Cup, co-hosted by the U.S. for the first time, ramps up, investors have pumped nearly a billion dollars into their American ambition.

Microsoft CEO Satya Nadella and Adobe CEO Shantanu Narayen are among the executives investing in the new U.S. professional league, Major League Cricket. Other cricket investors include Iconic Ventures, Madrona Venture Group and executives from Google.
“What gets me excited is seeing if cricket can become a mainstream sport in the U.S.,” said Soma Somasegar, venture capitalist and managing director at Madrona.
Somasegar and Nadella are among the key owners of Seattle’s cricket team, named the Orcas. They’re also investors in the overall league.
“Satya [Nadella] and I have been talking about bringing cricket to America for many years,” Somasegar told CNBC.
Nadella is such a diehard cricket fan that Microsoft has a cricket field at its campus in Bellevue, Washington.

Monank Patel of the U.S. national cricket team celebrates his half century (50 runs) during the ICC Men’s T20 Cricket World Cup match between the U.S. and Pakistan at Grand Prairie Cricket Stadium in Dallas, June 6, 2024.
Matt Roberts | ICC | Getty Images

“A lot of us immigrants grew up with this sport. We’d study and watch cricket. On repeat,” said Somasegar.
In total, nearly $850 million is currently in the process of being invested in building a viable cricket league in the U.S., people familiar with the funding said. The people asked not to be named because the funding information is private.
Currently, there are six professional teams in Major League Cricket, with each team expected to spend roughly $75 million to $100 million in the coming years. That includes the cost of putting together a team, hiring the right talent and building stadiums where live cricket matches can be played.
Adding to the fanfare is the T20 World Cup, which is being held at three locations in the U.S. and several in the West Indies throughout June.
On Thursday, in a stunning blow, the U.S. team beat Pakistan in a match held near Dallas. Fans are now counting down to the highly anticipated India vs. Pakistan match Sunday at the newly developed Nassau County stadium in New York.
The last time India and Pakistan matched up, more than 300 million people in India tuned in to watch the game, according to The New York Times.
Ticket reseller StubHub said the average price of tickets for Sunday’s rivalry match is $1,300. The average price for the other 54 matches of the tournament is $120, the company said.
Venture capitalist Anurag Jain, part owner of Major League Cricket team the San Francisco Unicorns, said the U.S. national team is primarily made up of players in the league.
“The goal is to make cricket a mainstream sport,” said Satyan Gajwani, the vice chairman of Times Internet, the digital arm of the Times of India. He heads up Willow TV, which has the exclusive streaming rights for cricket in North America, including the T20 World Cup.
Gajwani is also one of the investors in the U.S. league. He said his group is going after the incredibly loyal fans from South Asia who live in the U.S.
“You essentially have 5 million really hard-core fans that love cricket,” Gajwani told CNBC, referring to the South Asian diaspora in the U.S.
He added that expats from the U.K. and Australia who live in the U.S. are also big consumers of cricket.
South Asians on average have the highest gross income of any ethnic group in the U.S., according to research from Indiaspora, a nonprofit community of Indian leaders around the world.
“That leaves a lot of discretionary income that is available to be spent on sports and entertainment,” said M.R. Rangaswami, founder and chairman of Indiaspora.
Rangaswami, who said he will be at the match Sunday, acknowledged that the U.S. sports scene is tough to crack, with Americans consumed by basketball and football. He said a potential entry point could be through fans of baseball, which has some resemblance to cricket.
— CNBC’s Jessica Golden contributed to this report. More

The Food and Drug Administration expanded the approval of GSK’s respiratory syncytial virus vaccine to adults ages 50 to 59 who are at increased risk of getting severely sick from the virus. 
The agency first approved GSK’s jab in May 2023 for patients 60 and above, who are more vulnerable to severe cases of the virus. 
The FDA’s expanded approval could help GSK maintain its dominance in the RSV market, which includes shots from Pfizer and Moderna.

A view shows GlaxoSmithKline headquarters in London, Britain, January 17, 2022.
Hannah Mckay | Reuters

The Food and Drug Administration on Friday expanded the approval of GSK’s respiratory syncytial virus vaccine to adults ages 50 to 59 who are at increased risk of getting severely sick from the potentially lethal virus. 
The shot, called Arexvy, is the first vaccine cleared by the FDA to protect that population from RSV. The agency first approved GSK’s jab in May 2023 for patients 60 and above, who are more vulnerable to severe cases of the virus. 

RSV causes thousands of hospitalizations and deaths among seniors each year, according to data from the Centers for Disease Control and Prevention. But the virus can also cause severe illness in adults 50 and up — or even younger — with underlying chronic conditions such as asthma, diabetes and congestive heart failure.
About 13 million Americans ages 50 to 59 are at high risk of severe illness from RSV, said Phil Dormitzer, GSK’s head of vaccines research and development and infectious disease research, in an interview. 
“It’s useful both because, of course, you can meet the medical needs of that age group,” Dormitzer told CNBC, “but it’s also nice for pharmacists to have a single vaccine that they can administer to a wider population, so that provides simplicity.”
GSK’s shot won’t reach that new patient population just yet. An advisory panel to the CDC will vote later in June on recommendations for GSK’s vaccine, along with a rival shot from Pfizer and a newly approved jab from Moderna. 
The FDA’s expanded approval could help GSK maintain its dominance in the RSV market later this fall and winter, when the virus typically spreads more widely in the U.S. The British drugmaker’s shot booked around £1.2 billion in sales last year, outpacing the $890 million (about £699 million) in revenue that Pfizer’s vaccine raked in. 

GSK Chief Commercial Officer Luke Miels said on an earnings call in May that the company remains “very confident” that Arexvy can bring in more than £3 billion in peak annual sales over time.
Dormitzer said GSK had a successful last RSV season, but noted that the company will always “take the competition seriously.” 
He said Arexvy showed strong efficacy in patients who have underlying medical conditions. 
In a late-stage trial, a single dose of the shot elicited an immune response in high-risk adults ages 50 to 59 which wasn’t worse than that observed in people 60 and above. 
A previous late-stage trial on that older age group found the shot was nearly 83% effective at preventing lower respiratory tract disease caused by RSV and around 94% effective at preventing severe disease. 
Safety data in adults ages 50 to 59 was also consistent with data in adults 60 and above, according to GSK. Side effects included fatigue, headache and muscle pain, among others, which were mostly mild to moderate in severity. 
A single dose of GSK’s shot was only slightly less effective in adults 60 and up after two seasons of the virus, showing 67.2% efficacy against lower respiratory tract illness. Dormitzer said the company will test the vaccine’s efficacy over three RSV seasons to see if it can provide even longer protection. 
GSK is also studying Arexvy in other patient groups to expand the shot’s reach in the future. The company is expected to announce trial data later in 2024 on two separate patient groups: people ages 18 to 59 who are at increased risk of severe RSV, and adults with weakened immune systems.
Dormitzer added that the company is also expanding the shot’s reach in other countries. Regulatory agencies in Europe, Japan and other areas are currently reviewing GSK’s application to expand Arexvy’s approval to high-risk adults ages 50 to 59. 
GSK’s shot is approved in nearly 50 countries, a spokesperson for the company told CNBC.   More

United Airlines launched Kinective Media, a platform that aims to connect brands to customers via the carrier’s seat-back screens and app.
The carrier is already working with Norwegian Cruise Lines, Macy’s and IHG Hotels & Resorts.
The airline is in the process of upgrading its narrow-body planes to add seat-back screens.

Passengers on a Boeing 737 Max-8 plane during a United Airlines flight departing from Newark Liberty International Airport (EWR) in Newark, New Jersey, US, on Wednesday, March 13, 2024.
Bing Guan | Bloomberg | Getty Images

Now playing on United Airlines’ seat-back screens: personalized ads.
The carrier on Friday said it launched a media platform to serve travelers personalized advertisements on seat-back screens and in its app, among other platforms, as it seeks to leverage customer data.

United said its new platform, Kinective Media, is already working with Norwegian Cruise Line, Macy’s, IHG Hotels & Resorts, TelevisaUnivision and JPMorgan Chase, which offers a host of co-branded credit cards with United.
The platform is the latest example of airlines trying to drum up new lines of revenue and leverage their lucrative loyalty programs. Delta Air Lines said in early 2023 that it would start offering free Wi-Fi to customers if they were registered members of its SkyMiles frequent flyer program.
“Unlike some commerce media platforms, United gives brands across a wide range of industries the ability to reach engaged customers throughout the entire marketing funnel — from brand consideration to conversion — in a way that’s highly personalized and relevant, and we’re already seeing impressive results,” Richard Nunn, CEO of United’s MileagePlus loyalty program, said in a news release.
United declined to provide projected sales from the initiative.
Customers can opt out of seeing targeted ads through a United web page, and United says advertisers can’t access customers’ personally identifiable information, the airline said.

“There is the potential for 3.5 hours of attention per traveler, based on average flight time,” United said.
The airline is in the midst of a massive upgrade of its narrow-body cabins, including its in-flight entertainment system with new screens and other features, though supply chain problems have delayed some of the aircraft revamps.

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Spirit is struggling in the wake of a failed takeover by JetBlue Airways and a Pratt & Whitney engine recall.
CEO Ted Christie said the company isn’t considering a Chapter 11 bankruptcy filing.
The company has shifted its business model to get rid of most flight-change fees and bundle perks that it used to sell a la carte.

A Spirit Airlines aircraft undergoes operations in preparation for departure at the Austin-Bergstrom International Airport in Austin, Texas, on Feb. 12, 2024.
Brandon Bell | Getty Images

Spirit Airlines CEO Ted Christie said Friday that the budget airline isn’t considering a Chapter 11 bankruptcy filing and is “encouraged” by its plan after a failed takeover by JetBlue Airways.
Spirit has been struggling with shifting travel demand, increased U.S. competition and a Pratt & Whitney engine recall that grounded dozens of its Airbus planes.

Earlier this year, a federal judge blocked JetBlue’s planned takeover of Spirit on antitrust grounds, raising concerns on Wall Street about the money-losing airline’s ability to address its debt. Spirit said in February it is seeking to refinance.
“We are proudly executing to our plan as we’ve exited the merger agreement with JetBlue and are encouraged by the initial results of our stand-alone plan,” Christie said at an annual shareholder meeting on Friday. “We are not evaluating a Chapter 11 at this time.”
S&P Global Ratings on Wednesday downgraded Spirit, raising questions about its ability to refinance. It pointed to a $1.1 billion loyalty bond due in September 2025 and a $500 million convertible note due in 2026.
“Given the constrained cash flow generation and operating performance, along with management’s public announcement of its decision to engage with lenders to assess options for addressing its upcoming maturities, we believe it’s likely the company will face a distressed exchange,” it said.
The company’s finance chief is leaving to become CFO at Hertz, the companies said earlier this week.

Spirit’s shares have lost more than 77% this year through Thursday’s close. The company has taken a host of steps to save and drum up cash including deferring some Airbus deliveries and sale-leaseback deals.
The airline also recently shifted its business model, ditching most flight-change fees and bundling perks that it previously sold a la carte alongside a cheap fare.
It has also softened other policies, extending the life of flight credits from 90 days to a year, and raising maximum weights of checked bags to 50 pounds from 40.

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Oscar Health CEO Mark Bertolini outlined the health insurers three-year plan to become a bigger player in the employer market ahead of the company’s investor day.
Bertolini says Oscar can leverage its position in the ACA market to compete with larger insurers to provide more affordable health plans for small- and mid-sized companies.
Bertolini sees more transparency on pharmacy benefits as one of the keys to holding down costs for employers and patients. 

Mark Bertolini has helped Oscar Health move toward profitability after taking over as CEO of the health insurer a year ago. Now, he says the company’s next phase of growth and profitability will focus on tapping into the employer market.
That effort will include “going after the 71 million lives that are in small group and middle market employers, where most employees are over-insured to take care of the few sick people in the group to get a level premium,” Bertolini explained, ahead of the company’s investor day Friday.

“We have a huge opportunity to create a whole new market,” he added.
It’s not a new concept. When Affordable Care Act exchanges launched 10 years ago, analysts predicted employers would abandon the complexities of buying group coverage and adopt individual coverage health reimbursement arrangements, or ICHRAs, giving workers cash to buy their own ACA plans.    
Bertolini says the market never took off because insurers were not focused on keeping costs down for employers or their workers.  
“What we’re now going to do is put plan designs in and underwrite the group. So we get the employees to the right plans — like an ultimate flexible benefit plan,” he said.
Moving into the employer market is part of Oscar’s strategy to expand its membership from 1.5 million to roughly 4 million by 2027.

Ahead of its analyst day presentation, the company set a target of achieving approximately 20% annual revenue growth over the next three years and earnings of $2.25 per share in 2027.  

Focus on PBM contracts

After serving as CEO of Aetna for eight years, Bertolini has deep knowledge of how large insurers and pharmacy benefit managers operate. Earlier this year, he likened his role at Oscar to being on a pirate ship ready to disrupt big Spanish galleons laden with gold.
Last year, he helped Oscar negotiate more favorable terms on its pharmacy benefit management, or PBM, contract with CVS Health’s Caremark division, which he says has helped Oscar control medical costs on its plans.
Oscar Health’s contract with CVS Caremark runs through 2026.

Mark Bertolini speaking at the CNBC Evolve New York event on June 19. 2019.
Astrid Stawiarz | CNBC

Next year, Bertolini will be watching how health insurer Blue Shield of California implements its potentially disruptive PBM model.
Blue Shield contracted with a smaller PBM firm for the bulk of its drug benefits in an attempt to rein in costs for its members. It will use Mark Cuban’s Cost Plus Drugs and Amazon Pharmacy as its preferred pharmacy networks starting in 2025.
“I think the PBM model is played out,” Bertolini said. “They need to start being legitimately straightforward with the customer base and saying, we’re going to pass on all the [savings] that we’ve been able to create with the size of our organization directly to you. If they make that leap, either through insurance premiums, or through the pharmacy itself, then I think they can stick around.”
The three major U.S. PBMs — CVS’s Caremark, Cigna’s Express Scripts and UnitedHealth Group’s Optum Rx — have seen their businesses come under increasing regulatory scrutiny. Over the last year, all three have launched more transparent pricing models for insurance and employer clients.

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The U.S. far outpaced the rest of the world in minting millionaires last year, adding 600,000 new millionaires and powering record fortunes at the top, according to a new study by Capgemini.
The stock rebound at the end of 2023 combined with trillions of dollars in government spending as well as the AI boom continue to power the U.S. wealth machine.
When it comes to their investments, the wealthy are shifting their money from safe, wealth preservation to more aggressive growth assets, according to the report.

B2m Productions | Digitalvision | Getty Images

The U.S. far outpaced the rest of the world in minting millionaires last year, adding 600,000 new millionaires and powering record fortunes at the top, according to a new study.
America’s millionaire population grew 7.3% in 2023 to 7.5 million people, according to a report from Capgemini. Their combined fortunes grew to $26.1 trillion, up 7% from 2022. Capgemini defines millionaires as those with investible assets of $1 million or more not including primary residence, collectibles or consumer durables.

While interest rates remain higher, the stock rebound at the end of 2023 combined with trillions of dollars in government spending and stimulus continues to power the U.S. wealth machine.
The fortunes at the very top of the wealth ladder are growing fastest. The number of Americans worth $30 million or more grew 7.5% in 2023, to 100,000, while their fortunes surged to $7.4 trillion.
Globally, ultra-high net worth individuals account for 1% of the millionaire population but now hold 34% of its total wealth, showing the increasing concentration of wealth even among the wealthy.

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The big question is whether the wealth boom of the past decade, initially fueled by low interest rates and liquidity, and more recently by Covid-19 pandemic stimulus and artificial intelligence, can continue. Global conflicts, elections, interest rates and a potential economic slowdown could all slow the pace of wealth creation, said Elias Ghanem, global head of the Capgemini Research Institute for Financial Services.
“The last 10 years were exceptional,” Ghanem said. “We now have inflation, a potential recession and geopolitical problems and elections. The environment is completely different.”

Indeed, globally, the wealth picture looks more mixed than in the U.S. The number of millionaires worldwide grew 5.1% last year, to 22.8 million, according to the report. Their combined fortunes grew to a record $86.8 trillion.

Next to North America, Asia-Pacific had the strongest millionaire growth, at 4.8%, followed by Europe with 4%, Latin America at 2.7%, the Middle East at 2.1% and Africa down 0.1%.
Ghanem said that while Asia surpassed North America’s millionaire population and growth in the years before the Covid-19 pandemic, the U.S. is dominant once again. 
When it comes to their investments, the wealthy are shifting their money from safe, wealth preservation to more aggressive growth assets, according to the report. Their cash and cash-equivalent holdings have come down from a high of 34% of their portfolios at the beginning of 2023 to 25% in January, meaning they are starting to put their cash to work.
Their fixed income holdings jumped from 15% to 20%, and their real estate investments increased from 15% to 19%. Their holdings of stocks continue to fall, to 21%, their lowest level in more than 20 years. While the major stock averages have done well this year — with the S&P 500 up 12% so far and the Nasdaq Composite up 14% — wealthy investors are shying away from a market driven largely by a handful of giant tech stocks.
Ghanem said alternatives, especially private equity and private credit, are likely to get the biggest inflows from wealthy investors this year. Two-thirds of millionaires plan to invest more in private equity in 2024, according to the study.
“Everything is cyclical and because private equity has not done well, it’s a good entry point,” he said. “They figure if they enter now, when it’s cheaper, it’s a good long-term play.”

As the wealth and population of the wealthy soars, the battle over managing their fortunes is becoming increasingly fierce. Ghanem said the winners will be those that best serve the ultra-high net worth clients, or those worth $30 million or more. Capgemini said the ultra-wealthy will be the fastest-growing customer base, as well as the most profitable.
They are also the hardest to attract and retain: The ultra-wealthy have an average of seven wealth management relationships, up from three in 2020. More than three-quarters of the ultra-wealthy plan to switch their primary wealth management firm in 2024.
Ghanem said the most important strategy for firms trying to win more business from the ultra-wealthy is to better understand the clients. Companies may know the financials of their clients, but they rarely understand their family dynamics, psychological risk profiles, investment biases, lifestyles or geographic diversification, he said. 
Since ultra-wealthy clients are choosing wealth management firms increasingly on value-added services — such as succession and next-generation planning, taxes, concierge services and access to private deals — companies need to do deeper research on their broader financial and family lives.
Ghanem also said wealth management firms face an onslaught from family offices, the private investment arms of rich families. More than half of ultra-wealthy investors plan to set up a family office, and they say family offices provide better privacy, personalization and independence.
Rather than trying to compete with family offices, wealth management firms need to become better partners by offering a full suite of both financial and nonfinancial products, he said. Firms that can offer truly global advice, in multiple countries, as well as lending, lifestyle advice, insurance solutions, portfolio monitoring, real estate, travel and health care advice and next-generation education will be the winners.
“They need to provide the whole ecosystem,” he said. More

GM is increasingly using the Costco Auto Program for EVs as it expands its portfolio from niche vehicles to mass market segments with vehicles such as the Chevrolet Equinox, the automaker said.
The program acts as a facilitator, or partner, for franchised dealers and automakers such as GM, offering Costco members special pricing on the vehicles via discounts and other incentives, Costco said.
Costco Auto has facilitated more than 500,000 vehicle sales annually over the past five years on average, the retailer said.

Customers exit a Costco store in Teterboro, New Jersey, June 28, 2023.
Kena Betancur | Corbis News | Getty Images

DETROIT — General Motors has a not-so-secret weapon when it comes to getting U.S. consumers into its new all-electric vehicles: Costco Wholesale.
The Detroit automaker said it’s increasingly using the retail giant’s Costco Auto Program for EVs as it expands its portfolio from niche vehicles to mass-market segments with vehicles such as the Chevrolet Equinox and Chevrolet Blazer EVs.

“We have a great partnership with Costco, and I’m really bullish on Costco because I like their brand,” GM North America President Marissa West told CNBC during a recent interview. “I am encouraging the team to see how we can build this partnership.”
West sees EVs as a “huge opportunity” to expand GM’s reach with Costco’s more than 50 million members in the U.S. The automaker is also the exclusive automotive partner for Costco Auto in Canada.
Automakers such as GM, Ford Motor and Volkswagen have been shifting their electric vehicle strategies in recent months in an effort to boost sales and achieve long-elusive profits on the vehicles. Brands have eased off all-electric messaging, leaned into hybrid vehicles as a bridge toward adoption and struck charging partnerships to boost consumer confidence in the market.

Michael Wayland / CNBC

An intermediary such as Costco, which has a robust customer demographic for new vehicle buyers, could help move the needle for EV sales.
Costco Auto, a third-party service of the wholesale retailer, doesn’t sell the vehicles, Costco said. Instead, it acts as a facilitator, or partner, for franchised dealers and automakers such as GM, offering Costco members special pricing on the vehicles via discounts and other incentives, the retailer said.

Costco Auto has facilitated more than 500,000 vehicle sales annually over the past five years on average, according to Jay Maxwell, Costco Auto Program general manager responsible for strategic partnerships.
That volume, like that of many of Costco’s products, is a lot. It amounts to at least 3% of all vehicles sold in the U.S. each year and more than the annual sales of large publicly traded dealer groups such as Lithia Motors and AutoNation.
GM declined to disclose how many Costco customers have purchased GM vehicles through the program.

EV interest

A growing number of vehicle sales made through Costco Auto are of electric vehicles, Costco said. About 7% of member requests for vehicles to Costco Auto were related to electric vehicles in 2023, according to Maxwell.
“Our membership has always liked new things, and EVs are absolutely new to the marketplace,” Maxwell said. “This is a great way for the [automakers] to market and get their EVs out in front of people that are interested. Costco has a very strong demographic that fits well with EV buyers.”
In addition to GM, Costco Auto has partnered with Volvo, including its Polestar EV startup brand, Audi and others over the years.

GM’s 2024 Chevrolet Equinox EV during a media launch event for the vehicle in Detroit, May 16, 2024.
Michael Wayland / CNBC

Costco Auto partners with automakers such as GM to offer nationwide discounts in addition to separate partnerships with more than 3,000 franchised dealers from across the U.S., which it calls its “Everyday Auto” program, Costco said.
The sweeping discounts from automakers can be used at any franchised dealer, or Costco will suggest a partner dealer where shoppers can work with a Costco Auto-trained employee, the retailer said.
Such dealers have specially trained employees who are knowledgeable of all available incentives and offer haggle-free pricing that’s competitive with their market, Maxwell said.
“It has a pre-negotiated price already established that we work with the dealer every month to make sure that it’s updated and it’s market competitive,” Maxwell said. “You know the price is going to be a great price because you’re getting it through Costco, and you can really focus on and enjoy the buying experience.”
GM is currently offering Costco members nationwide a $1,000 incentive “certificate” on the Equinox, Blazer and Cadillac Lyriq EVs through July. The Costco-only discount is in addition to any other company or dealer incentives, Maxwell said.
“There’s some pretty strong incentives going on in the market for EVs right now, so they get that additional value on top of it,” Maxwell said. “It really makes it a compelling offer to somebody who is considering an EV.” 

Michael Wayland / CNBC

The often-steep price point on all-electric vehicles has proven to be a hurdle to mass adoption. Industry executives such as GM CEO Mary Barra have cited pricing alongside charging infrastructure and consumer education as contributing to a slower-than-expected sales pace for EVs.
Cox Automotive reports the average transaction price for electric cars in the U.S. was $55,242 as of April. That’s a more than $10,000 premium when compared with gas-powered vehicles, according to Cox.
The Costco member incentives typically last between 60 and 90 days, and members also can receive other deals on pre-owned vehicles, maintenance and service, according to Costco. Participating retailers are currently offering 15% off auto repair, up to $500 off.

Costco customers

Dealers and automakers that partner with Costco Auto also get to leverage Costco’s reputation and consumer experience. GM has been a Costco Auto partner in the U.S. since 2011 and in Canada since 2019.
“What do you know about Costco? You know that they stand behind their product. You know that you’re going to get a good value,” West, herself a Costco member, told CNBC. “I believe that the Chevrolet brand especially has great synergy with Costco.”
Costco members are largely made up of suburban and urban households, and 58% are between the ages of roughly 42 and 59, according to Numerator. The market research firm reports Costco members are also typically affluent, with 35% of members making above $125,000 — 25% higher than shoppers at the average retailer — and 46% making between $40,000 and $125,000.

Chevrolet Blazer EV on display at the New York Auto Show, April 6, 2023.
Scott Mlyn | CNBC

Buyer age and income are both key demographic considerations for car companies such as GM that are working to get more EVs in the garages of American drivers.
Costco shoppers also are very loyal and prefer the retailer over many other stores, according to global marketing data and analytics firm Kantar.
“Costco’s members are extremely loyal to Costco,” Julie Craig, vice president of shopping insights at Kantar, said in a statement. “These members feel that the savings they receive through their memberships offsets the membership fees, and that Costco offers them value beyond what they can get at other stores.”
Automakers as well as associated dealers pay Costco Auto a subscription fee, largely to cover marketing and advertising for the vehicles, Maxwell said. He declined to disclose subscription costs for the companies.
The Costco Auto Program was initially part of wholesale competitor Price Club, which merged with Costco in 1993.
– CNBC’s Melissa Repko contributed to this article. More