The latest way to get a new car isn’t buying or leasing. Today, you can use a car subscription service to park a shiny new car in your driveway. While there are several automakers experimenting with subscription services, they’re not all succeeding. Care by Volvo, however, is doing so well there’s a wait list for the XC40.
This new method of ownership makes the whole process more simplified. Care by Volvo bundles the cost of the car, insurance, and maintenance into one monthely payment. Pricing ranges from $650 to $850 per month depending on which vehicle you choose.
There was no way to know how the public would respond when subscription services made their debuts. Book by Cadillac just ended its run. This service cost $1,800 per month and gave access to a whole fleet of vehicles that could be swapped up to 18 times per year.
It sounded like a good idea, but after a brief run in limited markets, the service ends at the end of the year. Though it may come back, for now it’s over.
Volvo is having far greater success with its program. It started last November with the launch of the XC40 and requires a two-year contract. After four months, Volvo had as many subscriptions as it anticpated having at the end of the first year.
That qualifies as a success, but there are some challenges. So many people were signing up for leases that those looking to buy an XC40 outright couldn’t get their hands on one.
This caused frustration for dealers who couldn’t sell cars they couldn’t get and customers who were faced with lenghty waits. Volvo said that 15 percent of its crossovers were going to the program, but eventually created a 10 percent cap to make sure dealers still had cars to sell.
The success of Care by Volvo flies in the face of Cadillac’s failure with Cadillac by Book, but the two programs are quite different. While Volvo has a lower cost and only a once per year swap, Cadillac allowed 18 swaps each year.
Since subscription services are new, there is a huge amount of variety in how each works. Some involve multiple car swaps for free, others charge for swaps, and all of this comes with varying terms lengths and prices.
Volvo looks to have found a sweet spot for their program. While that’s a boon for the business model, the company can’t meet the current demand. Sign up for an XC40 through Care by Volvo today and you won’t have your car until sometime next year.
There’s a place for subscription services, it’s just going to take automakers time to figure out how they should work.