Volvo Revives Subscription Scheme for California
Volvo Cars is reintroducing its subscription model in California, despite having previously gotten in trouble for violating the state's franchise laws. While the automotive industry has attempted to hype the premise for years, vehicle subscription services haven't gotten much love from consumers and tend to exist in a legal gray zone that makes regulators uneasy. We even bashed them years ago for being one of the most expensive ways to get into an automobile, with only a modicum of features to help rationalize the added expenditure.
Early versions of subscription plans functioned like a lease, allowing customers to pay a premium to swap between models. It was effectively like having a permanent rental vehicle that the manufacturer would be willing to exchange once certain conditions were met. Often presented as a luxury service, the logistics of managing such an endeavor turned out to be a real problem for most brands. A lot of these services weren’t profitable and customers were already scrunching their faces at the premise of opting into a more expensive lease with some curious perks about limited vehicle swapping.
This encouraged most manufacturers to abandon their subscription schemes within the last four years. Despite often being touted as luxury experiences (e.g. “Book by Cadillac” and the “Mercedes-Benz Collection”), there simply wasn’t enough interest for the concept to stick around. While German brands have attempted to pivot toward “selling” individual features via subscription – effectively charging customers to rent hardware that’s already been equipped to their vehicles – almost everyone else just trashed the idea.
Volvo is the exception – not that it hasn’t faced challenges of its own.
In 2019, the California New Car Dealers Association complained to the state’s New Motor Vehicle Board that “ Care by Volvo” basically allowed the automaker to circumvent dealerships by allowing customers to order cars directly online. Later that year, the Department of Motor Vehicles launched an investigation and determined that Volvo was deceptively masking leases as subscription services by 2020. The DMV basically said Volvo had to stop what it was doing and had failed to provide adequate information for both dealers and customers.
However, Automotive News recently quoted corporate leadership as saying it’s wholly committed to its subscription program and has even found its way back into California.
"Giving customers the freedom to move in a personal, sustainable and safe way is our mission," Volvo Car’s outgoing CEO (for our market) Anders Gustafsson told the outlet. "Working with our retailer partners to offer the flexibility to do so is one way we are fulfilling our mission."
The rebooted program emerged immediately after the company started taking heat from state regulators and is more in line with what German manufacturers were offering when subscription schemes first started being floated as an idea. It ups the number of eligible models and allows retailers to offer in-stock vehicles to participating customers.
"It became clear to us that we needed to provide more differentiation between our current subscription and a lease," Care by Volvo U.S. former chief Peter Wexler told Automotive News following the revamp. "The most natural way to do that was to introduce more flexible terms."
The revised California subscription service is similar to Volvo's program in New York: Customers can choose a vehicle from retailer stock and must secure their own insurance coverage.
Brian Maas, president of the California New Car Dealers Association, said the new Care by Volvo is "significantly different than the earlier iteration, which was found to violate California law by our DMV."
Volvo retailers are the contact point for subscription consumers and are free to price the vehicles, Maas told Automotive News. Also, Volvo won't offer a competing lease product.
"This program was designed to help us capture a new audience and introduce them to the safety, sustainability and technology benefits of driving a new Volvo car," Gustafsson said. "The flexibility and all-inclusive offer conquests customers from other brands, but our vehicles are helping keep them with us."
Volvo has said that the scheme is profitable but has decided against sharing the take rate or how much money it has raked in thus far. While that could mean there’s something to hide, it would be strange for Volvo to stick with the plan if it were an utter failure. Based on how other subscription plans have performed, it doesn’t seem like there’s a lot of hope for Care by Volvo. But the brand’s leadership has said it’s 100 percent committed to it – likely due to the claim that it's bringing in a lot of younger customers that have never tried a Volvo product before.
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"circumvent(ing) dealerships" should be illegal.
Does "circumventing" mean spending my money there?
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