Volvo Cars of North America has upgraded its certified pre-owned program to kick off 2013 and its dealers are already seeing some positive effects.
What started in January, Volvo’s CPO warranty is now a seven-year/100,000-mile deal, up from six years/100,000 miles previously.
Additionally, Volvo changed its pricing structure for dealers to where it is now a one-price dealer cost. (In other words, instead of dealers paying different prices to certify different models, now there is a one flat fee, regardless of model).
The company also began offering closed-lane sales for Volvo-only dealers at auction in September.
Steve Golow — the pre-owned and remarketing manager at Volvo Cars of North America — talked with Auto Remarketing last week about why the company made these changes and the benefits the program and dealers are already seeing.
“At the end of the day, the biggest motivation for the changes was to increase our CPO business,” Golow said.
With regards, specifically, to the pricing piece, the one-cost model was implemented to help alleviate any confusion. As for the extended warranty, Golow said: “By stepping up to a seven-year/100,000-mile warranty, we have put Volvo back into a best-in-class position in the premium category.”
That sentiment has been duly noted by Kevin Flanagan, president of Smythe Volvo in Summit, N.J. The one-year enhancement on the warranty coverage period is something that has resonated with shoppers, he said.
“The extra year really makes a difference,” he said, particularly given the industry’s longer lease terms during the downturn that created an older, higher-mileage crop of vehicles coming back as CPO candidates.
Likewise, Hans Kraml — the general manager of Barrier Volvo in Bellevue, Wash. — sees similar benefits from the extra year of coverage.
“The upgrade from six to seven years adds a great deal for value for our clients, most of who drive well below the 16,000-plus miles per year it would take to see the full benefit under the old program,” Kraml said.
“In addition the ability to now upgrade a ‘prior CPO’ to the seven-year program is a big win on all the ‘08-09 cars we take in trade that are nearing the end or their original coverage,” he continued. “The ability to add an additional year makes selling these cars much easier.”
“The seven-year/100,000-mile warranty is a very strong advertising point that shows both the manufacturers’ and dealers’ faith in the quality of the product.”
That, and the point Golow made previously about boosting CPO sales, is at the crux of the program’s enhancements.
In this same vein, Flanagan emphasized how this enhanced program “keeps us relevant,” while noting that “we really rely” on hearty CPO sales; this program allows them to accomplish that feat.
Kraml also touched on why these upgrades are important to dealers like him.
“In the competitive used market, the CPO warranty, advertising and branding will help us present a better value proposition than our competitors selling non-CPO vehicles,” Kraml added. “After a client purchases a CPO vehicle, we have a much better chance to see them long term in our service department.”