Automobile

Volvo teams with Costco Auto Program on used-vehicle sales

It’s not clear whether those earlier conversations were hindered by the onset of the coronavirus pandemic. Maxwell told Automotive News in August that Costco executives regularly discuss with automakers potential partnerships on incentives, including on CPO vehicles. But in 2022, as dealerships in the Costco network continued to grapple with limited new-vehicle allocation, Costco Auto Program revisited expanding incentives to used vehicles, he said.

Volvo had been the first automaker to partner with Costco Auto Program on a new-vehicle incentive with structured pricing in 2007. Since then, the two companies have offered roughly 12 different vehicle incentives, Maxwell told Automotive News. And both parties came to the same conclusion in 2022, he said: Why not design an incentive program for CPO vehicles, which are desirable to buyers and not nearly as scarce as new cars?

“Our dealers are no different than what dealers are experiencing in general [with] inventory availability,” Maxwell said.

It made sense to partner with Volvo on such an effort, Maxwell said, because the automaker and Costco Auto Program already had that “very good working relationship.” Volvo’s vehicles also are a popular option for Costco members — typically the No. 1 or No. 2 luxury brand that they request, he said.

Offering those members deals on used vehicles is not new for Costco, however. The program has long offered prearranged member pricing on certified used vehicles through approved dealerships in its network. Costco’s first used-vehicle programs launched in a few markets in 2006.

If the new Volvo CPO promotion matches the success of its other promotions, it seems reasonable that Costco would strive to offer other automaker-specific CPO incentives, Maxwell said. He did not disclose other brands that Costco Auto Program may already be working with to develop such incentives.

“We have conversations with all of our OEM partners about all of our offerings, and with this being a new offering, everybody’s taking a peek,” Maxwell said.

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