By on July 15, 2018

2016 BMW X6, Image: BMW

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]

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74 Comments on “Unsubscribed: The Problem With Car Subscription Services...”


  • avatar
    dwford

    The whole idea is dumb. If you need a particular type of car for a certain day or occasion, you can rent pretty much anything these days. Why pay extra over the course of a subscription term for the once in a while need? And who, paying $2,000+ a month, is going to ever want anything less than the top model offered? It’s not like someone who has access to an X6 M is going to decide one day they feel like driving a 320i.

    • 0 avatar
      jalop1991

      “If you need a particular type of car for a certain day or occasion, you can rent pretty much anything these days. Why pay extra over the course of a subscription term for the once in a while need?”

      I’ve been saying that for years, about the pickup truck crowd that claims they “need” a pickup to haul plywood from Home Depot. No, you don’t–and you don’t need to DD a bro-monster because you like the idea of being able to do these things.

      • 0 avatar
        Art Vandelay

        However most pickup owners use their trucks far more than “the occasional plywood”. I actually did the math on this based on my actual usage over the course of 2 years. By far the cheapest option was to own and DD a pickup. It would take like 12 dollar a gallon gas to shift that equation. I could change my lifestyle somewhat (hire out many of the home jobs and sell my travel trailer, but without sitting at home versus the trips my family and I love I’d still need like 7 bucks a gallon. Sure I could move to a.trendy area and live in 1000 square feet of Urban bliss, but I don’t hate myself.

      • 0 avatar
        srh

        “””
        I’ve been saying that for years, about the pickup truck crowd that claims they “need” a pickup to haul plywood from Home Depot. No, you don’t–and you don’t need to DD a bro-monster because you like the idea of being able to do these things.
        “””

        This is such a tired comment, and while it might be expected on a greenpeace forum it’s distressing to see it on a car enthusiast site. If you’ve been saying it for years, then you may want to rethink the issues you harp on.

        First, you know nothing about other’s needs. Second, and more importantly, “need” is irrelevant. If you own a car then you are already far exceeding your “needs”. Get a bicycle and rent a car when you need it. If you own a house larger than 200 sq ft, then by your logic you should rethink your living arrangements. Likewise a coffee maker, and a fridge.

        Nobody *needs* a Mustang GT. In fact it’s far more wasteful by any measure than an F-150. Yet somehow the vitriol applied to pickup trucks, which actually do serve a useful purpose for many of their owners, is seldom applied to sports cars.

        Good grief. It would be great if the internet vehicle police busy-bodies would just make themselves a sub-reddit or some such where they can revel in their smugness with an equally unenlightened audience.

        • 0 avatar
          Lie2me

          Can we add 4X4 SUVs and crossovers to this list as well? I like my 4WD Crossover, I like the way it drives on muddy/snowy roads, I like the extra carrying capacity when I need it, I like the view from the raised driving height. Others may not think I need a 4WD crossover, but until they’re willing to pick-up my transportation costs kindly keep your thoughts on my needs to yourself.

          Ah, that felt good :)

        • 0 avatar
          87 Morgan

          Thank you SRH.

          The sanctimonious crowd loves to break the balls of the pick up driver, yet never reveal what they drive.

          If we all bought on need, then we would have the cheapest, most affordable base model people mover that met the needs of our household.

          No one needs a MB, BMW, really anything larger than a Prius.

          • 0 avatar
            DenverMike

            It’s not a problem borrowing or renting one, but it’s not the same as owning the pickup, full access. Otherwise you start to feel like you need to ask your dad for permission with at least a day’s notice.

            It ruins the moment too. All the last second, 3AM jump in the truck, get there before sunrise, improvised pickup only stuff.

            The delayed or scrubbed missions? Not a problem. You really start to feel you can do anything at any given time.

            And all cars should have an outdoor deck, a tailgate/workbench/seating or at least a rail to rest your elbow on, chatting it up with a neighbor at your gate or friend in the diner parking lot.

            Just being in America, no need to look back, or worry about the haters. You owe it to all those in far away, ruled by kings and queens places that can only dream.

          • 0 avatar
            Vulpine

            Need vs Want:

            A very simple example is the fact that this past weekend, I NEEDED a high-cube truck to help family move from one house to another. For that purpose, I did rent…a 15 foot U-haul for 48 hours timed to get effectively three days of work out of it. Even so, it wasn’t cheap but it got the job done. Now I’m back to my compact SUV and “compact” pickup truck for my own purposes and DD which cover all my basic needs.

            … HOWEVER…

            There are times that my specific compact truck doesn’t meet my NEEDS, because it’s a regular cab and I need some marginal in-cab length to carry more things under cover that I don’t want to haul in an open bed. BUT, I also don’t want or need a full-time second seating row which takes up cubic footage that can be put to better use.

            Wants and needs; needs and wants. Each person is different and I understand that–but many don’t want to recognize that different people’s wants exceed their needs.

      • 0 avatar
        padou

        I could care less what others drive. For most of us what we drive is personal preference. I am sure that this debate has gone on for quite some time; probably stretching back through history. How many people in the old west picked out a horse based on color, size, power, and such even though they didn’t ‘need’ that type of horse? I’m sure that many of them could have gotten along nicely with a pack mule not that Mustang or colorful Appaloosa.

        Same goes for today with vehicles. Yeah, we could all probably get by on basic no-frills transportation. Heck, we could probably rent or ride-share everything. Of course, that would get in the way of our lives pretty fast.

        So you need to do that milk and beer run to the c-store at midnight? Nope, the ride-share vehicles are all in use and Uber is picking up drunks downtown.

        Forgot to pick up the laundry at the dry cleaners? Maybe tomorrow when you can carpool with some friends.

        Doing some landscaping around the house and discover you are two bags short of mulch and the wife is nagging you to get it done or there is no ‘reward’ after the kids go to bed? You can hang it up buddy, because Enterprise closed at 5 p.m. and Home Depot charges $30 to deliver – tomorrow.

        What we drive is an extension of ourselves and the lives we lead to some extent. I personally can’t comprehend some people’s reasoning for their vehicle purchases. The guy driving the ‘green’ barely a golf cart that can go 50 miles on a charge mystifies me as much as the guy with the F-350 lifted 4 feet off the ground and low-profile tires. Let’s not even get on the subject of the hooned out GT-R with 1,600 hp at the wheels or the Demon bought just to take it to the track a couple of times a year. And what about those dang kids that do that drifting?

        Yeah, all of those are probably not practical vehicles in any way. But for some reason that is what the owner has deemed that they want and need. Most likely, the wants override the needs in all of these scenarios. So when I see these vehicles on the road, I don’t get my blood pressure boiling to stroke levels. I just sort of chuckle to myself and have a laugh with my buddies over a cold beer about the latest goofy (to us) lapse in taste of a vehicle owner.

        At most I’ll think about how that green car will fare on I-10 in southeast Texas as it struggles to hit 50 mph as everyone else blasts past them at 85. Or “hope that fella realizes he better be ready to eat a crap-ton of meatballs while he waits for it to charge at Ikea.”

        I can wonder how in the hell that 5’7″ dude climbs into that jacked up F-350? Rope ladder perhaps? And what exactly is that truck good for? Yeah he has excellent visibility, but damn dude, you know that 4WD is useless with those rims and tires.

        The GT-R and Demon people have such sucky lives as well. Really, all you bought that car for was to go blazing down the track while grinning from ear to ear as you realize this is more fun than viagra at Cabo during spring break! Lucky bastards!

        As for those dang drifting kids, let me use some outdated terminology that will show my age: YOLO! Enjoy your youth. Pretty soon you’ll be remembering fondly the days when you could burn through a set of tires in the pursuit of burnouts to gain the eye of a well-endowed blonde (this could apply to guys and girls – equal opportunity here!) in some modern mating ritual. As you get older and LIFE happens you will have to balance fun and responsibility to family should you choose that route.

        So the balance of wants and needs will most likely level out. It did for me. I’ve owned a lot of vehicles in my 45 years. Some practical some not. But one thing is for sure about all of those vehicles. They served a purpose in my life at the time. Whether it was the Mustang after the divorce, or the used beater because I couldn’t afford anything better.

        It was mine because I chose to own that vehicle. Right now I drive a truck. Nothing fancy. Nothing extravagant. But it serves a purpose. Yes, I have empty cargo space that is used just a few times a year. Yes, it doesn’t get the best mileage. But it also hauls me and my kiddos where we need to go when we want to go. I don’t engage 4WD but a few times out of the year, but it’s there when I need it. Same said for that ‘useless’ cargo space.

        It’s the perfect vehicle for me. If it’s not your thing then fine, that is your prerogative in life. Just don’t call me when you need that plywood hauled because it won’t strap to the roof of the green-mobile.

        Scratch that. Call me. I’ll haul it for ya. It would make for a helluva beer story.

        • 0 avatar
          PwrdbyM

          I don’t want to get all patriotic but it’s conversations like this that make me glad I have the freedom as a car enthusiast to buy what I want. While we’re here complaining about the choices of fellow motorists there are people in countries that are automotively repressed. For example I’ve been in countries that levy a 50% sales tax on car sales. Following that there are huge taxes on fuel and a yearly tax based on engine size. A friend of mine noted he chooses to pay more taxes so he can drive a “more powerful” vehicle….his net, a 2.2L CRV. All of these taxes reduce the car culture to nothing but a sea of tiny white hatchbacks. No thanks, drive what you want I say and enjoy every minute of it!

          • 0 avatar
            Vulpine

            My problem is that I can NOT buy what I want; US regulation prevents the import of the type of vehicle I want AND no US manufacturer will build it, though one brand builds them for non-US customers in Mexico and Argentina. Even GM builds them for South American use… but not North American.

      • 0 avatar
        don1967

        “I’ve been saying that for years, about the pickup truck crowd that claims they “need” a pickup to haul plywood from Home Depot.”

        How long have you been hearing these voices in your head coming from imaginary truck owners? Do you also hear voices from imaginary Lexus owners, wine collectors and other people who have nice things which you don’t?

    • 0 avatar
      arach

      I think its dumb to call an idea dumb that works.

      And while you might not want to do it yourself, people are signing up for and paying for subscription services, which tells me clearly its not dumb.

      • 0 avatar
        TwoBelugas

        you don’t need to be a genius to see the subscription based plan wasn’t designed to save the consumer money, it’s only proposed to increase profit for the car companies.

  • avatar
    Sub-600

    “Psychographics”. Good grief.

  • avatar
    Lie2me

    Leasing faced a lot of opposition when it was first offered, but these new ideas once tweaked for the mass market will probably offer enough “convenience” to make it worth while to enough people that it will be pretty mainstream in a few years. We’ll see

    • 0 avatar
      MBella

      Leasing is successful because it allows people to drive a vehicle for less financial outlay than a purchase. This allows people to get vehicles that they couldn’t otherwise afford. Since these car share programs cost more than a purchase, I don’t see the appeal. And this is assuming you drive the most expensive model most of the time.

      • 0 avatar
        arach

        One thing is you don’t have to worry about being “qualified”.

        Even someone who is leasing has to have sufficient credit to “afford” the lease period.

        A subscription, you pay up front… kind of like a rent to own furniture store. Sure it costs more, but you don’t have to worry about credit and whatnot.

        Again, all those rent-to-own stores are a lot more expensive than just buying the dang furniture/tv/etc. But since you only have to show proof you can afford the first months payment, they are really really popular…

        • 0 avatar
          MBella

          If that’s the case, then these are just a fancy way to do sub prime lending at absurd interest rates.

        • 0 avatar
          IBx1

          arach, I don’t think people who can swing $3,700/mo to rent an X6 they could simply lease for $1,000/mo have an issue with credit approvals.

          • 0 avatar
            arach

            I was thinking more about the normal person programs.

            I don’t understand the $3700/mo thing unless you live in California and have a 2 month consulting gig in NYC and thats cheaper than renting a car from enterprise. (which it probably isn’t)

            I don’t really care about some ultra-elite premium service option made for the top 1% of the top 1%.

            I interpreted the article as talking about about it moving down stream to normal people… the $650-750/month offerings available in many cities, and the $700/ month volvo ordeal.

            So if the question is, “Who is going to be buying $500, 600 dollar subscription services” as it moved down market, I think that will overlap a lot with the furniture/tv/monthly buyers.

          • 0 avatar
            IBx1

            That I agree with, but if I could have proper driver’s cars with manuals for $5-600/mo and switch between them as I sampled the cars of each year, with mileage and insurance included, I’d be all over it. The $5-600 tier will likely get you a “Dodge Avenger or similar” soul-sucker for people who have a driving record and can’t get decent insurance. One thing I just thought of is people in situations like that may have an SR-22 on their insurance and may be rejected from the program.

        • 0 avatar
          Vulpine

          Rent to own store:

          You pay a seemingly small amount weekly that adds up to double what the average loan rate would be for the cost of the item, for twice as long as it would take to normally pay off the MSRP of the item… In other words, you’re paying not only double the cost of the item but a high interest rate as well, giving the RTO store 4x profit on cheap goods.

          • 0 avatar
            Vulpine

            Oh, that’s assuming you pay every week… if you miss a payment, you pay double the missed amount just to keep them from repossessing it.

        • 0 avatar

          You do have to qualify for the subscriptions as well, and the insurance. It’s not designed to be a work around for that angle, or else you would see it far more popular on the base brands rather than the lux cars.

  • avatar
    28-Cars-Later

    Nice piece.

  • avatar
    Fred

    If you don’t care about long term costs or don’t want to do the math, then subscribe and all your dreams will come true.

    • 0 avatar
      arach

      I did the math and the program in my area was going to save me money.

      we’re all in different situations, but we did an analysis of a real book by cadillac customer in NYC.

      It could easily cost you $1000/month to park in NYC, so say you have 2 cars, including One convertible you only drive in summer, and a 4×4 you drive in winter.

      You pay $2000/month in parking, $300/month in insurance, $100/month in maintenance, and $1800/month in payments on 2 cars.
      So you decide to give Book by cadillac a shot.
      Your old cost was $4200/month for 2 cars.
      Now, with book by cadillac, your paying $1800 month for a convertible i nsummer and a 4×4 in winter, $1000 for parking, $0 for insurance, and $0 for maintenance. Your $4200/month is now $2800 month.

      You save $1400/ month, or $16,800 per year.

      Its even close on the outskirts of town:
      You pay $1000/month in parking (2 x $500/mo), $300/month in insurance (close to NYC average), $100/month in maintenance ($50/per vehicle per month), and $1400/month in payments on 2 cars.
      So you decide to give Book by cadillac a shot.
      Your old cost was $2800/month for 2 cars.
      Now, with book by cadillac, your paying $1800 month for a convertible i nsummer and a 4×4 in winter, $500 for parking, $0 for insurance, and $0 for maintenance. Your $4200/month is now $2300 month.

      You are saving $500/month or $6,000 per year.

      These are very realistic numbers for real customers… so I agree Fred, do the math… but its not always more expensive.

      • 0 avatar
        ajla

        Cadillac doesn’t sell any convertibles.

        • 0 avatar
          danio3834

          “Cadillac doesn’t sell any convertibles.”

          Won’t he be surprised. “Did the math” but didn’t find out what he’d be getting in return.

        • 0 avatar
          arach

          Actually the example customer did have a mercedes convertible for summer and a BMW SUV for winter… Bought Book by cadillac.

          Don’t know what they drive now… maybe an ATS? Just because you have a convertible doesn’t mean your replacing it with another convertible…

          This is what has made book by cadillac fairly successful- They’ve been getting a lot of buyers from other OEMs.

      • 0 avatar
        Fred

        There are always exceptions, but is that enough to build a business case for?

        • 0 avatar
          arach

          I recall reading that book by cadillac had over 5000 subscribers, and something like 70% were new to Cadillac in NYC alone.

          That sounds like a pretty strong business case. I’m trying to find that article now. I’ll post it up if I can track it down.

  • avatar
    Weskyvet

    This’ll really appeal to the ghetto fabulous.

    1. Use tax return to buy a couple months subscription.

    2. Drive biggest bestest BMW in the stable.

    3. Put Rent to Own 20s on said BMW (I doubt they’ll drop by daily to look at the car.)

    4. Impress the local hood rats.

    5. Slay P***y.

    6. Repeat.

  • avatar
    SCE to AUX

    At $600 to $700 per month for the XC40, Volvo’s plan could make sense.

    • 0 avatar
      Art Vandelay

      Man if I paid 2 grand a month for access to the tier BMW’s I would absolutely treat them like the rentals they are. Honestly leasing something like the S3 is around 700 and I have to deal with it for 3 years. I could be inclined to do this from time to time just to beat the ever living crap out of some expensive German iron. Woe be until the sucker that buys it CPO when I’m done with it. Think a new 8 series will do 150 in 2nd gear? Only one way to find out!

  • avatar
    87 Morgan

    I think the dealer level subscription services will take off.

    This way you can get multiple makes along with every type of car.

    You can have a CC Tundra one week and a CT6 the next followed by an expedition for the weekend soccer tournament.

    FWIW I dont see how being tied to one brand makes for a good experience.

    • 0 avatar
      Richard Chen

      Carmax ought to have a subscription service where you could say, rent a minivan for a road trip, swap to a convertible at your destination.

    • 0 avatar
      smartascii

      I know of one dealer group that’s offering this in Columbus, Ohio. It lets you do exactly what you’re talking about, and at least when I was reading about it, you could also switch between tiers, so you could choose how much fancy you wanted to pay for during a given month. This struck me as the most compelling version of these subscription models, since you weren’t limited to a make or even a class of vehicle. It was still quite a bit more expensive than leasing, but they included insurance and maintenance, and there were no mileage caps, so I could see it being workable for a few people.

    • 0 avatar
      arach

      I could tie myself to Ford or Chevy.

      Mustang Convertible, F150, Taurus DD, and explorer for winter?

      Maybe not too awful.

  • avatar
    ernest

    One frightening, totally off topic comment. $2000/mo subscription would also write a 30 yr, $400,000 mortgage, give or take. Being on the back side of this equation (I’m 63), I’m wondering how many younger guys with subscriptions will be having a “Burn the Mortgage” party in their 50’s or 60’s? (Mines in December).

    • 0 avatar
      Lie2me

      The good credit, responsible guy is probably not going to find a subscription auto service to his liking anyway. This is going to attract someone who’s furthest thought is paying off his mortgage, I think, but I could be wrong

      Congrats on the upcoming mortgage burning :)

      • 0 avatar
        srh

        These services will not appeal to the good credit, responsible middle-class guy, obviously.

        But there is a market among the affluent. While I’m not so fortunate I have friends with 7-figure household incomes. When a car breaks down and needs service, they generally replace it. Foolish? Not really. When you may be called (and frequently are), on a moments notice, to jump on a plane for a week of international travel for work, dealing with a car repair is a real hassle.

        A $2000/month subscription service for a car is in the noise. Particularly with the apparent conveniences. Someone meets you outside the corporate office and gives you the keys to an appropriate car for the weekend? I’m pretty sure they’d use that service frequently.

        I don’t know how many people are in this boat. Probably not a whole lot in percentage terms but quite a few in absolute numbers. Maybe a half million people make $1M+ per year. A lot more than that have multi-million dollar net worth. These folks can afford this service and I could understand why they might avail themselves of it.

    • 0 avatar
      Scoutdude

      The problem is you are thinking like a risk averse, rational person, frankly from a different time. The average person today isn’t rational by your (or my) thinking. I’m in Real Estate and watch the lists of courthouse auctions, the online auctions banks sell their properties on and ones that are sold through conventional means. Very few people will every have a mortgage burning party. Cashback Refi has been the name of the game for many years. A couple of examples.

      I just helped a client buy a house. As part of my normal research I looked at the County records. It showed that they had owned the house for about 20 years and had purchased it with 10% down. They paid on that for about 8 years before a home equity loan shows up for a not immodest amount. Then a couple of years later a refi that wraps up that first home equity loan. Followed shortly after by yet another home equity loan and wrap up refi. The last loan was for about twice what they paid. Luckily they were able to walk away with cash thanks to the fact that the value of the home had approximately tripled.

      The other one that sticks out in my mind is one I found when it was in the foreclosure stage. They too had bought many years ago and started out with the HELOC, Wrap UP, HELOC, Wrap mode for a number of years but the addiction to that “free” money was too great and the next thing you know they were 80/20’ing it every couple of years. The thing that makes this one stick out was that it had a number of historic shots on Google street view and you can see how they used that cash machine to put a Mercedes, Lifted 3/4 ton diesel pickup, Ski Boat and large Class A Motorhome. Somewhere along the line some money was spent on the house redoing and expanding the driveway and creating a pad in the back yard for those toys.

  • avatar
    Bimmer

    Will it be new BMW? Because I’ve checked Ford program and most vehicles are 2015 (probably off lease).

  • avatar
    Vulpine

    ““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.”

    — Pretty much what I’ve been saying since the concept first came out. Leasing is little, if any, different.

    • 0 avatar
      Art Vandelay

      What is the cheapest subscription service. You can lease a basic Fiesta for like 120 bucks a month (I’m sure there are others, I just did those numbers a few weeks ago out of curiosity). That makes sense to some people who may be at a point where they just need to turn a key and not think about it for 3 years but will be better off or able to assume some risk with a used car down the road.

  • avatar
    TW5

    Subscription services would revolutionize the automobile industry; therefore, it is unlikely the manufacturers will utilize them in a meaningful capacity.

    Subscription services would drive down the number of model variations. It would obliterate CAFE sales-weighted measurements. It would increase auto production as consumers expected brand new cars for their payments. Used car prices would collapse, which would probably drive more people into the subscription services, and provide incredibly cheap access to newish vehicles for low-income households. Insurance would be collectively bargained or maybe administered by the manufacturers because they have control of most repair parts and most technicians. Corporate mergers would be common, as niche brands sought to become part of a comprehensive lineup.

    Obviously, the manufacturers are not going to transfer a windfall of economic surplus to the consumer. That’s not how their business works. They will; however, whole heartedly embrace subscription services as a status symbol and a novelty for wealthier customers with more dollars than sense.

    I can only see one way for subscription plans to gain widespread acceptance. The market is more or less driven by 50% of drivers above median income. The other 50% do nothing for the manufacturers. If the manufacturers were able to put all of those people on $100/month subscription plans, they might go for it. However, they would need to offer something better than a 10-year-old jalopy to the lower-income crowd, and if they eliminate customers in the secondary market, they must transition substantially all of their current new-car-buyers to subscription holders. Difficult to say whether this is possible.

  • avatar
    Sub-600

    It will give the auto companies another excuse to raise prices, subsequently unions will ask for more. Pretty soon a 4 cylinder compact CUV will start at $40K for someone who wants to purchase one. Then they’ll find a way to lower the bar so the financially challenged can avail themselves of the subscription scam. This may, in turn, devalue certain models to the point where some some sweet pre-owned deals pop up, but more than likely these cars will have been abused. Then there is the insurance angle, they’ll come up with some kind of variable coverage so if you’re driving a C-Class your premium will automatically change when you upgrade to an E-Class for a couple of months. Who knows what they’ll do if you have a couple of accidents.

  • avatar
    arach

    I tried to sign up for subscription in my area, but I was right out of the market geography :(

    I did the math and it was going to save me a lot of money.

    The magic happens when your like many of us and have a bunch of cars… you know, a truck to do truck things, a jeep to do jeep things, a sports car to do sports car things, a DD to do DD things, and a van/SUV to do Van/SUV things.

    So I have all these cars in garages and in my driveway- like many others I know. I have to insure them, register them, and maintain them.

    So when they started a subscription that was $650 per month in my area and that included insurance, but would let me have a wrangler, a pick up truck, a Van/SUV, a Sedan, and a convertible sports car dependent on my mood, I though “bazinga!”

    If I sold all but one of my cars, and had that as my second car, then I wouldn’t need to keep a fleet of cars. No more big insurance, no more big registration fees, no more big maintenance costs, and more free space in my house!

    Just pull up the app and say “I need a truck” and a truck shows up on my door step.

    I think there’s a lot of value. I researched things like Book by cadillac, and thats their audience… “The person who has a convertible for summer but has an SUV for winter”. Thats who their audience is. If I can take 3, 4, 5 cars and now roll that into a signle subscription, its very price competitive.

    I view subscription as rich persons/elite version of car sharing… kind of like the other car sharing options but you always have one at your disposal, and someone else is delivering it for you. Again, $650/750 and I’m on it.

    I’m not paying $3500/month or whatever some people pay, but I think there’s a price point some subscription services are starting to hit where it starts working.

    This will be interesting to watch. I’m a believer and I love it, I just question if the profit is really there… but $650-750 is available in a number of places around the country, and at that price point, I find it quite appealing… especially for people who have 4+ vehicles.

    • 0 avatar
      TW5

      I also operate my own family fleet, and subscription service would probably be considerably cheaper in the long run, if done correctly. The difficult part is engaging the dealers. They would essentially become car storage and delivery, like a rental car lot. To keep them engaged, the manufacturers would probably need to allow the dealers to charge a fee for swapping vehicles. This would also reduce the demand for constant swapping, which would be necessary.

      The economics of subscription fleets could be precarious as well. If everyone is renting fleet services, and we experience another severe economic down turn, our economy could be crippled by lack of mobility. Despite all of its flaws, car ownership, like house ownership, is excellent for mitigating risk, if done properly.

      • 0 avatar
        arach

        The economics are going to be very interesting to watch. I too don’t know how the numbers “work out” when you factor in the physical effort required by the dealerships moving downstream…

        Although I think it could work WAY down stream in BHPH territory (they are already paying 5x the cars value… why not charge the weekly payment with no down payment in advance?)

        • 0 avatar
          TwoBelugas

          if you are truly determined to save money then it’s far cheaper to buy and operate a 10 year old Camry for DD and rent the specialty vehicles when needed rather than forking over 700 a month, if that’s even available for a plan that allows… “a truck to do truck things, a jeep to do jeep things, a sports car to do sports car things, a DD to do DD things, and a van/SUV to do Van/SUV things.”

  • avatar
    IBx1

    “X5 xDrive40e iPerformance”

    I wish this wasn’t a real vehicle name

  • avatar
    IBx1

    “X5 xDrive40e iPerformance”

    I wish this wasn’t a real vehicle name

  • avatar
    MoparRocker74

    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…

  • avatar
    lagunadallas

    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!


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