In the last five years, the Costco Auto Program has sold approximately 200,000 vehicles through its Select Pre-Owned and Costco Certified Pre-Owned offerings. This year alone, however, Costco is on track to move more than 50,000 SPO/CPO vehicles.

As explained by management, the SPO program — a relatively new offering from Costco — consists of cars that are “higher-end pre-owned vehicles” that might not be eligible under an OEM CPO program but still have some of the OEM warranty remaining.

In detailing the program, the Costco Auto Program website indicates that “not every used car can be classified as ‘select pre-owned’ by the Costco Auto Program. Select pre-owned vehicles must meet certain eligibility requirements.”

Also included among the benefits is the fact that “repairs can be made at any franchised dealer (manufacturer-backed warranty).”

Costco pilot-tested the SPO program in 2013 and began officially rolling it out this year.

Explaining the launch in more detail, Costco Auto Program management indicated: “We want to make sure the dealers, who are already on our CPO program, have the resources they need to offer the SPO program and are prepared to provide an exceptional experience to Costco members so complete rollout will take place throughout 2015. For the Costco Auto Program, it’s about quality not quantity for both dealers and members.”

Auto Remarketing talked with members of the Costco Auto Program’s management team in August for an update on the program, and at that time, SPO and CPO sales were up 10 percent against 2013 figures, which was on par with the rest of the industry.

Lori Grone, field director for the Costco Auto Program’s remarketing division, explained how dealers have reacted to SPO and illustrated some of the opportunities the program brings for them.

“The reaction overall has been very good,” Grone said, “because with just having CPO, it’s more restrictive since it’s a smaller pool of inventory.

“But by adding SPO, it allows the dealers to have more of their vehicle eligible for the program for our members,” she added. “The SPO guidelines are still very late-model cars that have 12 months and at least 12,000 miles left on the bumper-to-bumper comprehensive warranty. They’re still very good cars — some of them are possibly certifiable, but are not certified for various reasons — that we’re able to include in the program.

“So, that works to the benefit of the dealers,” Grone added. “Also, some dealers do not certify all of their cars, so it enables them to offer those vehicles that fall into those parameters to our members.”

Not to mention, SPO allows dealers to certify vehicles that aren’t same-make cars. For instance, say, a Toyota dealer gets a really solid Honda as a trade-in. The dealer can certify it through SPO, and thus, provide more value to the customer.

Instances like this open up the possibilities for dealers using Costco’s programs to certify more cars and create more selling opportunities. And from Costco’s perspective, having SPO broadens the pool of offerings the company can provide for its dealer partners and customers.

What has also broadened Costco’s pool of SPO- and CPO-worthy vehicles has been the tide of off-lease vehicles that have hit the used-car market this year.

In fact, Costco’s management referenced the 400,000 additional off-lease units expected for 2014, per an article in Auto Remarketing the morning of the interview.

“It’s having a positive impact. It’s kind of good timing because there are a lot of off-lease vehicles,” Grone said.

“What that means is there’s a much better supply of quality used vehicles that would be perfect candidates for our CPO and SPO programs,” she added. “That all dovetails nicely into what we’re doing with our programs and the growth that we expect.”