Some car companies are introducing a new model.
Not models, MODEL.
And they’re betting that a healthy number of consumers will buy in.
Automakers such as Cadillac, Ford, Volvo and Porsche – and soon Mercedes-Benz and BMW – are going where magazines and newspapers (what are they?), smartphones, clothes, food, beauty products, pet supplies and other businesses have gone before: subscriptions.
That doesn’t mean they won’t be selling or leasing cars anymore, just offering another option, aimed at customers such as millennials who don’t need or want to own a vehicle.
“Vehicle subscriptions essentially package car ownership into a monthly fee that includes insurance and requires no long-term commitment,” reported Automotive News. “Some services charge thousands of dollars a month for luxury vehicles, while others offer mainstream vehicles for less. Most deliver a vehicle on demand and allow users to switch vehicles based on their needs.”
Volvo is one example.
“Having a new Volvo XC40 will be as hassle free as having a mobile phone,” said Volvo Cars in a press release announcing the “Car by Volvo” subscription service that eventually will expand to other cars.
While limited to the XC40 for now, here’s how the Volvo program works:
- After ordering online, Care by Volvo customers can drive away without having to worry about the down payment, insurances, taxes, service fees, etc., for about $600 a month.
- Care by Volvo will offer, depending on regional availability, a range of digital concierge services, such as fueling, cleaning, service pick-up and e-commerce delivery to the car.
- XC40 drivers also will be the first Volvo customers who can share their car with friends and family with a new digital key technology, which comes as standard for Care by Volvo customers.
Cadillac, another subscription pioneer, is expanding General Motors’ BOOK service to Los Angeles and Dallas after a successful pilot in New York. The automaker’s $1,800 monthly fee includes registration, taxes, insurance and maintenance costs, and subscribers can exchange vehicles up to 18 times a year. No commitment is required to lease, finance or buy a vehicle.
“The service is app-enabled and on demand, allowing access to the latest Cadillac models,” reported Auto Finance News. And “vehicles are delivered and picked up via white-glove concierge.”
Ford’s approach is a little different, having acquired a used-car subscription service, Canvas, and partnering with dealers in West Los Angeles and San Francisco Bay areas. Canvas subscribers receive used vehicles that are less than three years old and can only exchange them once a month. But the cost starts at about $400 per month depending on what vehicle a user chooses.
In Southern California, Hyundai offers subscribers an Ioniq electric car for $275 a month.
A handful of non-automakers such as Carma, Drive Flow, Flexdrive and Clutch also are offering subscriptions in selected markets, including Austin, TX, Atlanta, Detroit and Northern Virginia.
“With a lease or finance payment, you think that the car will be with you for a while,” Melody Lee, global director of BOOK by Cadillac, recently told Forbes.com. But subscription services allow a customer to choose a vehicle that fits his or her lifestyle instead of the other way around.
Subscriptions may not replace buying or leasing a vehicle, but for some it may be one way to go.