By on August 20, 2019

It’s no secret that Volvo dealers aren’t keen on the factory subscription plan. Last December, the California New Car Dealers Association even asked the manufacturer to end Care By Volvo on the grounds that it was taking business away from storefronts. The automaker responded by saying the service had proven popular with consumers, attracting new customers to the brand while reassuring dealers that version 2.0 of the subscription plan had been approved by the Volvo Retailer Advisory Board and would give shops more to do.

Rather than take the wait-and-see approach, the California New Car Dealers Association petitioned the state’s New Motor Vehicle Board. Last week, the group unanimously voted to direct the state’s DMV to investigate Care by Volvo and four claims that the service violates provisions of the California vehicle code — potentially leading to disciplinary actions. 

According to Automotive News, dealers began petitioning in January with a public hearing manifesting last week.

“This is just the first step in ensuring that manufacturers, specifically Volvo, stop going around their franchisee business partners in an attempt to retail vehicles directly. Franchise laws exist to protect dealers from this type of behavior,” Brian Maas, president of the dealers association, said in a statement. “Our dealer members support innovation, including subscription-based models, but we are against violating the law. There is a right way and a wrong way to do business in California, Care by Volvo is the wrong way.”

Care by Volvo launched in 2017 as a two-year subscription service. As with most subscription plans, use of a vehicle, insurance, and maintenance are all packaged into one monthly payment. After a 12-month stint, subscribers can swap for a different vehicle. Originally, that meant Volvo customers could get an XC40 for between $650 and $850 per month (depending on trim). But the service has expanded to other models since then.

“Volvo Car USA is committed to developing Care by Volvo in collaboration with our retailers to offer the flexibility of subscription side-by-side with traditional lease and financing,” a Volvo Car spokesperson said in response to the investigation. “We continue to improve the program, which will soon enable retailers to complete subscription purchases and provide instant vehicle delivery. Volvo Car USA believes the addition of a subscription option on the sales floor will benefit both customers and retailers.”

The New Motor Vehicle Board wants the DMV to provide it with a report on the results of the probe within the next 180 days.

[Image: Volvo Cars]

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17 Comments on “Volvo’s Subscription Service May Breach California’s Franchise Law...”


  • avatar
    stuki

    ” Franchise laws exist to protect dealers from this type of behavior,”

    In totalitarian dumps, all laws exist to protect the privileged idle from competition from their more efficient betters. After all, how else is idle, incompetent mediocrities supposed to be living large off of overcharging those with fewer connections in The Party.

    • 0 avatar
      ToddAtlasF1

      I talked to a girl who operates a bar truck at various events. She told me a catering license here in Virginia Beach is $4,000 a month. I’m sure it has nothing to do with protecting the established players who can afford politicians.

      We’re true Blue here, right down to the only competition being between two fascist development projects trying to get their hands on many tens of millions of taxpayer dollars. There’s only so much graft to go around, and they’ve both bought their board members. Will the ‘Dome Site’ get its $90 million to build some luxury condos and a wave pool, or will the money go to making a luxury resort out of a community surf beach and Rudee’s Loop first? Both projects have bought their politicians. Now it’s time to see which fascist can disperse public money the fastest.

    • 0 avatar
      JoeBrick

      Isn’t that what ALL government is ? Screwing one group of people and rewarding another group of people ? With very few exceptions.

  • avatar
    R Henry

    This situation, combined with TESLA’s direct to consumer sales model, appears to be evidence of upcoming change in the franchised dealer model that dominates automotive retailing. It will be interesting to observe how Internet based retailing disrupts the automotive industry as it has done in books, apparel, and nearly everything else.

    • 0 avatar
      honda1

      I agree. As for this ridiculous program, I would bet that there are all of 2 people in cali that subscribe to this crap.

      • 0 avatar
        CKNSLS Sierra SLT

        Honda1
        As an ex-Southern Californian I am taking exception to your statement. There are A LOT of folks with money in California. Consider the fact if you own a home in a decent neighborhood-that makes you a millionaire (or very close to it)-at least on paper.

        And many home owners use their equity as an ATM machine.

        You would be surprised at the amount of luxury-or near luxury cars sitting in front of what appears to be modest houses-but are expensive properties.

        • 0 avatar
          honda1

          CKNSLS Sierra SLT

          I am fully aware many people use their home equity as an ATM machine. My comment was not that people could’t afford this idiotic program, but that nobody would be foolish enough to do it. Who on earth would pay (rent) $850 a month for the top trim xc40???

          • 0 avatar
            ToddAtlasF1

            That includes car insurance. California car insurance is often ridiculous. A friend of mine had a $985 car payment and a $1,000 a month car insurance payment when he was 26 years old. A car and insurance for $700 a month? Sounds like Volvo could find out why California car insurance is so expensive when only about 70% the population is accountable to the law in the most populous areas.

          • 0 avatar
            CKNSLS Sierra SLT

            Honda1
            If you lease a luxury/sports car-and pay insurance you are not that far from the payment mentioned.

            And car insurance rates swing wildly-based on zip codes in California.

          • 0 avatar
            highdesertcat

            “California car insurance is often ridiculous. ”

            And selective! Often, unless they can saddle you with expensive Full Coverage, they don’t want to insure you.

            My #2 son who lives in San Diego, CA, once bought a NEW car for the daily commute. A Hyundai Santa Fe. Outright sale. Paid Cash. No lienholder involved. No Full Coverage insurance required.

            He tries to get it insured with several local CA auto insurance companies, but wants only CA-State Mandated MINIMUM required insurance on it — IOW NOT full coverage.

            Each of those local insurers turned him down. He had to go to USAA to get insured and has been with USAA ever since.

          • 0 avatar
            ToddAtlasF1

            Driving in California without full coverage is begging for trouble. I had a coworker whose 5-series BMW was destroyed by an illegal alien who had no ID and gave an obviously false name and address to the CHP at the scene. The CHP let the illegal alien leave as my coworker pleaded with the officer not to accept Juan Lopez at 123 Main Street as contact information. The CHP said, “That’s why you have insurance.” That’s why insurance is thousands in California.

        • 0 avatar

          “There are A LOT of folks with money in California”

          That is the problem, to solve it we need to tax these people more and more. How about increasing property taxes, getting rid of prop 13 and replacing capital gain tax with income tax? We can also introduce consumption tax and increase tax rate for higher tax brackets.

  • avatar
    Garrett

    The Care by Volvo isn’t really right for me, but if I was living in CA and in the market for a car, I’d be signing up on principle.

    Dealers should justify their existence through economic value added, not via laws designed to inject unnecessary cost without an associated benefit.

    If a dealer really believes they deserve to be part of the food chain, they need to explain what purpose they serve…and let consumers decide whether they are worth using.

  • avatar
    CKNSLS Sierra SLT

    Highdesertcat-

    The question that begs to be asked here is

    1) Why would he want to put a 20ish grand (vehicle) at risk by not having full coverage?

    2) Does he have ZERO other assets-because anyone with any assets at all knows the state minimum are sub standard for anyone with a house, pension, IRA or anything that could be attached in an at fault accident.

    I can only assume he is one of those guys who thinks he will NEVER get in an accident.

    • 0 avatar
      highdesertcat

      CKNSLS Sierra SLT, It’s probably MY fault since I don’t carry any more insurance than I absolutely am mandated to carry by the State the vehicle is registered and licensed in.

      Even on brand new vehicles like my wife’s former 2016 Sequoia, her 1992 Towncar, 2008 Highlander, or my 2011&2016 Tundras, or my 2006 F150 or my former 1988 Silverado. No Lien involved = minimum State-mandated coverage.

      I only enact Full Coverage on a vehicle when taking it on an extended duration, long-distance trip, then go back to minimum mandated coverage upon my return home.

      To be realistic, I have had people run into me. They were covered by GEICO (theeeeee best insurance company for the non-military person) and State Farm (theeeee worst insurance company if one of their drivers hits you).

      Having Full Coverage does not prevent “a house, pension, IRA or anything that could be attached in an at fault accident.” from being attached since even the most generous coverages are woefully inadequate to cover such losses.

  • avatar
    CKNSLS Sierra SLT

    Highdesertcat-

    For reasons I won’t go in to-
    I have a half-million dollars coverage on my auto policies. After that coverage my 1 Million dollar umbrella kicks in.

    No one plans to be financially ruined-or have a lien on their assets-but one could be putting those to the test at some point with your ideology.

    • 0 avatar
      ect

      Sierra, you’re exactly right. I spent a lot of years running corporate Risk & Insurance programs, so saw a lot of data on what a crash, however unintended, can cost. Anyone who drives without at least $1 million in liability coverage is a total fool. $2 million is better, and not much more expensive, if it’s available to you.

      I had to laugh at Brian Maas’ comment that “our dealer members support innovation”. I guess that’s why they spend so much money on brib…er, lobbying politicians to make sure that no innovation takes place that will threaten their legislatively protected position.


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