Costco Auto Program goals to companion with automakers to supply extra promotions on used autos as new-vehicle availability stays restricted.
For years, retailer Costco’s auto program has labored with a number of automakers to supply incentives on new automobiles and vehicles to Costco members via a community of greater than 3,000 taking part franchised dealerships.
In August and September, Costco Auto Program provided a $1,250 low cost with Volvo on that model’s licensed preowned 2019, 2020 and 2021 XC60 and XC90 autos. It marks the “first time an OEM has participated and marketed their CPO choices” via this system, mentioned Jay Maxwell, this system’s common supervisor of strategic partnerships.
The Costco Auto Program has been attempting to land such a CPO partnership for years. A Costco government informed Automotive Information in 2019 that talks had been ongoing with a number of automakers about utilizing this system to drive gross sales of licensed and incoming off-lease autos.
It isn’t clear whether or not these earlier conversations had been hindered by the onset of the coronavirus pandemic. Maxwell informed Automotive Information in August that Costco executives repeatedly focus on with automakers potential partnerships on incentives, together with on CPO autos. However in 2022, as dealerships within the Costco community continued to grapple with restricted new-vehicle allocation, Costco Auto Program revisited increasing incentives to used autos, he mentioned.
Volvo had been the primary automaker to companion with Costco Auto Program on a new-vehicle incentive with structured pricing in 2007. Since then, the 2 firms have provided roughly 12 totally different car incentives, Maxwell informed Automotive Information. And each events got here to the identical conclusion in 2022, he mentioned: Why not design an incentive program for CPO autos, that are fascinating to consumers and never practically as scarce as new automobiles?
“Our sellers aren’t any totally different than what sellers are experiencing generally [with] stock availability,” Maxwell mentioned.
It made sense to companion with Volvo on such an effort, Maxwell mentioned, as a result of the automaker and Costco Auto Program already had that “excellent working relationship.” Volvo’s autos are also a well-liked choice for Costco members — usually the No. 1 or No. 2 luxurious model that they request, he mentioned.
Providing these members offers on used autos just isn’t new for Costco, nonetheless. This system has lengthy provided prearranged member pricing on licensed used autos via authorized dealerships in its community. Costco’s first used-vehicle packages launched in just a few markets in 2006.
If the brand new Volvo CPO promotion matches the success of its different promotions, it appears cheap that Costco would attempt to supply different automaker-specific CPO incentives, Maxwell mentioned. He didn’t disclose different manufacturers that Costco Auto Program could already be working with to develop such incentives.
“Now we have conversations with all of our OEM companions about all of our choices, and with this being a brand new providing, all people’s taking a peek,” Maxwell mentioned.
Maxwell described 2021 as Costco Auto Program’s greatest quantity 12 months. Members purchased greater than 775,000 new and used autos via this system in 2021. That compares with greater than 689,000 autos bought in 2020. About 20 % of autos bought every of these years had been used.
Member requests for used autos grew roughly 2 % year-over-year in 2021, in keeping with Maxwell.
Even with the new-vehicle shortages, which have pushed the business’s car incentive spending manner down, the Costco Auto Program continues to companion with automakers to supply promotions on choose new autos. For example, Costco members who final month bought or leased a brand new 2021, 2022 or 2023 Chevrolet Silverado 2500 HD or 3500 HD had been eligible for $1,000. Members who purchased or leased sure new 2022 or 2023 Audi fashions had been additionally eligible for pay as you go scheduled upkeep packages.