Commentary: Subscribe To Your Car Here…

2018 Chicago Auto Show
Photo by Randy Stern

The 2019 Volvo XC40 had a great launch in March of 2018. Over 1,000 units were spoken for in the USA alone, according to published sales figures.

A percentage of those units sold came from a new form of vehicle ownership transaction. It is called Care by Volvo. In other words, this is an inclusive subscription service that includes insurance, maintenance, and service on wear items. All told, a 2019 Volvo XC40 Momentum T5 AWD would be yours for two years for the subscription cost of $600 a month, as long as they adhere to a 15,000-mile driving limit per year.

This sounds like a great deal, right? Well…that is if you start comparing the cost of a purchase or a lease against the Care by Volvo subscription cost.

Instead of crunching the numbers, let’s talk about subscription car “ownership” for a moment.

It is a revised method that is targeted to those who rather not have a complete relationship with a vehicle. The idea was driven by the notion that urban-dwelling Millennials would rather take Lyft, Uber, taxicabs, car sharing services, and public transport than buy or lease a car/truck/SUV. The argument would be made that an inclusive subscription to a car would almost equal to the cost of using ride-hailing apps or car sharing services on a “regular” basis.

The Care by Volvo program is designed towards a relationship with a single vehicle. This is in contrast to the inclusive monthly-fee programs being instituted by Cadillac, Mercedes-Benz, and BMW. Those programs allow you to jump from one model to another when needed without a commitment to a single vehicle. These programs almost lean towards car sharing services instead of an open lease program.

This is an interesting turn regarding the use of the term “subscription” as a way to make automobiles available to those who do not want a long-term, open pocket relationship with them.

With Access by BMW, Book by Cadillac, Porsche Passport, and upcoming programs from Mercedes-Benz and Lincoln, it eliminates vehicular loyalty to a car/SUV of their own. Plus, these programs add more services, including concierge assistance and telematics. Another point to be made is that these programs are not widely available, but in certain markets to begin with. Cadillac offers this program in New York, Los Angeles, and Dallas at present, with Porsche starting up in Atlanta and BMW launching their program in Nashville.

This is where Care by Volvo makes sense. It is offered through every Volvo dealer in the USA. It is tied to one vehicle per subscriber. They can switch to another Volvo model after a year, instead of hopping from an XC40 to an XC90 and down to a V90 Cross Country while paying a singular monthly fee.

But, honestly, are these subscription services a replacement for actual automobile ownership? Vehicle ownership and “traditional” leases still exist, because there are many markets that they still are relevant in. A subscription service from Cadillac or BMW might not make sense if you live in a suburban or rural community. You need that vehicle and are most likely to retain that vehicle for the term of the lease or loan.

Yet, these subscription programs are all focused on urban dwellers – primarily Millennials who live in or extremely close to city centers. If you include non-OEM subscription programs, such as BORROW, Flexdrive, Clutch, Drive Flow, Carma, Yoyo, and Canvas, they do feed into the idea that you can have your car for a short time because you are not responsible for extra fees, such as registration, servicing, and so forth. However, because you live in an urban setting, you do have to pay for parking and deal with the daily grind of driving and caring for your vehicle in a densely-populated part of your metro area.

It also seems to me that most of these subscription programs are competing on a higher level in areas where (a) public transport is plentiful and car ownership is discouraged and (b) areas where there is no real marriage to car ownership whatsoever on a cultural basis. Yet, look at what you get for your membership and vehicle use fees! You get maintenance, insurance, wear servicing, access to premium vehicle services…you name it!

There is where you have to do the math. Take all of the fees you will pay for these subscription services and compare them to a lease or a loan. Your lease or loan payments do not include insurance, which may have already been set up by your insurance agency or the company you have been using since you began driving. It takes a phone call to your agency to see how much more or less your policy will cost you.

Some manufacturers already have a maintenance program and a solid warranty for your vehicle. These are included in your loan or lease payments. Not to mention that most of us have saved up for a down payment or the start-up cost of a lease to leverage a payment that fits in your budget.

Is a subscription service even worth it? Not sure at this point. While we consider the point of some form of a relationship between a vehicle and its owner/lessor that may put more minds at ease, something tells me that it might be a fad. Or, not.

Automotive Industry, Automotive Retail, CommentaryPermalink

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