Unsubscribed: The Problem With Car Subscription Services

Matt Posky
by Matt Posky
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unsubscribed the problem with car subscription services

Automakers are trying everything under the sun to turn a larger profit these days. Building and selling cars is no longer enough. Manufacturers now offer data plans, rental services, lifestyle products, and much more. One of the newest additions to their collective portfolio is the subscription plan — which yields customers a vehicle, insurance, maintenance, and other perks for a monthly fee.

However, as the concept is preparing to enter the mainstream market, the value of such programs have been called into question. While subscription services look like one-stop shopping, often providing users with the ability to swap models throughout the year, their cost effectiveness comes into doubt when one examines the bottom line. We’ve been skeptical for a while but Edmunds recently crunched the numbers to find out for sure.

“At these price points that we’re seeing, [a subscription service] virtually makes no sense to anyone,” Edmunds senior analyst Ivan Drury told Automotive News during a presentation on industry trends.

Using BMW’s $3,700 per month subscription plan as an example, he showed exactly how much more the program can cost customers. Access by BMW gives access to high-end vehicles such as the X6 M but it comes to $133,200, or double what it would cost to lease the vehicle for three years. Keep in mind that swapping to a less expensive model during that time would effectively reduce the plan’s cost effectiveness even further.

“If you went the other route versus the subscription cost … you could essentially have two,” Drury elaborated. “You can make your own miniature fleet. You don’t even need to use their program. So, it’s not going to be worthwhile for a lot of people who are going to do the math. It’s just a rich person’s toy.”

BMW does offer a less expensive subscription program at $2,000 per month. But, based up leasing offers we found on the more expensive models in its U.S. rotation (the M2 Competition and X5 xDrive40e iPerformance), you’re still spending nearly double. Although, subscription plans from other manufacturers don’t seem quite so bad if you spend the majority of your time in the more expensive models.

The Mercedes-Benz Collection plan starts at $1,095 and still nets you the concierge service that has a Daimler employee dropping off your chosen vehicle at a predetermined location. It’s still more expensive than leasing but, if you’re really into car swapping and like the white-glove treatment, it’s a semi-affordable alternative to BMW.

However, a spokesperson from Mercedes said that the comparison between the subscription plans and leasing wasn’t exactly fair. “This is not competing with leases,” the company said. “It’s for different needs, different mindsets, different psychographics. They’re paying a premium for the ability to do what you can’t do out of any other type of automobile acquisition.”

Fair enough, but there are examples of it being done in a way that will make you think twice about leasing. Care by Volvo is a subscription plan that has come with some problems. Customers have seen their delivery dates pushed back repeatedly as they wait for a vehicle. However, the pricing is actually competitive when you account for the added costs associated with leasing (insurance, down payments, etc). But whole point of a subscription service is access to a premium experience and ease of use, regardless of if you’re trying to hop into a $105,000 BMW X6 M or $33,000 Volvo XC40. If that aspect of it fails, then it’s impossible to rationalize the added expense.

Other brands have seen troubles as well but it has often been due to a limited supply of vehicles to meet demand. That sounds like a major victory for the automakers but it has been unclear if the issue stems from an overwhelming response from consumers or simply a problem with logistics

Will these services eventually be rolled out into mainstream brands? Most likely. “[The] thing that I think would be far more appealing from a regular consumer standpoint is having a diverse lineup,” said Drury. “These luxury automakers — they don’t have a minivan, they don’t have a pickup, they don’t have these other things that on occasion you might actually want to borrow.”

Edmunds claims that the mass-market appeal of such services lies in the ability to draw from a diverse lineup. With luxury manufacturers you really only have sporting sedans/coupes and SUVs. But that stable would be exceptionally diverse from an automaker like Fiat Chrysler, presuming it gave you access to all of its brands. Of course, that hasn’t happened yet but FCA is launching its Jeep Wave membership program offering three-tiers of access sometime next year.

While it will offer many of the same perks as its upscale competitors, it will cater to a broader demographic. Up until now, most of the subscription plans have had names like “ Book by Cadillac” and “Porsche Passport.” However, pricing for the mainstream market remains an issue. Would customers on a tighter budget be comfortable paying a premium on Ford vehicles when they’re only going to want the F-150 a couple times per year?

We think car sharing services like Zip Car and General Motors’ Maven may have already nipped this in the bud. There are also traditional rental outfits that can take care of most other needs. If you only need a pickup truck or utility van for the day, you can rent one with relative ease. You might not get the cleanest vehicle in the best condition, and you’ll have to pay a daily or hourly rate for it, but you will also probably end up saving money in the long run against any subscription service.

[Image: BMW]

Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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  • MoparRocker74 MoparRocker74 on Jul 16, 2018

    For something like an electric or autonomous car I can see this as a slightly higher end Uber/Lyft. I mean its not like anyone will want to actually 'own' a self driving box. For us enthusiasts, if a cheap ride subscription justifies something cool in the garage (Wrangler, Hellcat, Ram) for nice sunny days, date nights, camping trips, etc while letting a hailed on the spot appliance to deal with the commute in snow/salt, kid hauling and grocery getting...might be worth it. The smart move for the D3 would be to offer 'appliance service' for those who buy a corvette, hellcat, etc. They make their profits on niche vehicles anyway, but everyone needs a commuter box at some point. Being able to use and abuse one when needed makes that nice car purchase more than attainable...

  • Lagunadallas Lagunadallas on Jul 16, 2018

    These services will fail at these prices. $3,700/month for an X6M?!? I have a 2017 X5M (leased) and a 2013 Bentley Continental GT with a CPO warranty (financed with 20% down), and COMBINED they cost me LESS per month than $3,700 including gas and insurance... plus maintenance is already covered on the BMW. Good luck with that!

  • ToolGuy I appreciate the thoughtful comments from the little people here, and I would like to remind everyone that Ford Motor Company offers a full range of vehicles which are ideal for any driving environment including New York City. The size and weight our of product portfolio has been fully and completely optimized to be friendly to the planet and friendly to pedestrians while consuming the bare minimum of resources from our precious planet (I am of course a lifelong environmentalist). Plus, our performance models will help you move forward and upward by conquering obstacles and limits such as congestion and your fellow humans more quickly at a higher rate of speed. I invite you to learn more at our website.Signed, William Clay Ford Jr.
  • George Hughes What ever happened to the American can-do attitude. I know what, it was coopted by the fossil fuel industry in their effort to protect their racket.
  • 28-Cars-Later "But Assemblyman Phil Ting, the San Franciscan Democrat who wrote the electric school bus legislation, says this is all about the health and wellbeing of Golden State residents. In addition to the normal air pollution stemming from exhaust gasses, he believes children are being exposed to additional carcinogens by just being on a diesel bus."Phil is into real estate, he doesn't know jack sh!t about science or medicine and if media were real it would politely remind him his opinions are not qualified... if it were real. Another question if media were real is why is a very experienced real estate advisor and former tax assessor writing legislation on school busses? If you read the rest of his bio after 2014, his expertise seems to be applied but he gets into more and more things he's not qualified to speak to or legislate on - this isn't to say he isn't capable of doing more but just two years ago Communism™ kept reminding me Dr. Fauxi knew more about medicine than I did and I should die or something. So Uncle Phil just gets a pass with his unqualified opinions?Ting began his career as a real estate  financial adviser at  Arthur Andersen and  CBRE. He also previously served as the executive director of the  Asian Law Caucus, as the president of the Bay Area Assessors Association, and on the board of  Equality California. [url=https://en.wikipedia.org/wiki/Phil_Ting#cite_note-auto-1][1][/url][h3][/h3]In 2005, Ting was appointed San Francisco Assessor-Recorder in 2005 by Mayor  Gavin Newsom, becoming San Francisco’s highest-ranking  Chinese-American official at the time. He was then elected to the post in November 2005, garnering 58 percent of the vote.Ting was re-elected Assessor-Recorder in 2006 and 2010During his first term in the Assembly, Ting authored a law that helped set into motion the transformation of Piers 30-32 into what would become  Chase Center the home of the  Golden State Warriorshttps://en.wikipedia.org/wiki/Phil_Ting
  • RHD This looks like a lead balloon. You could buy a fantastic classic car for a hundred grand, or a Mercedes depreciationmobile. There isn't much reason to consider this over many other excellent vehicles that cost less. It's probably fast, but nothing else about it is in the least bit outstanding, except for the balance owed on the financing.
  • Jeff A bread van worthy of praise by Tassos.