Challenges

Car subscription models: Success and failures

Many car makers are experimenting with subscription models. Here are a few examples, and below some articles pointing to what's working and what's not:

1) Care by Volvo (allows you to subscribe to a car for $650/ month)
https://www.theverge.com/2017/11/30/16720830/volvo-suv-subscription-pla…

2) Book by Cadillac (subscribe to a Cadillac for $1,800/ month)
https://www.cadillac.com/world-of-cadillac/book-by-cadillac

3) Access by BMW (start at $2,000/month)
https://www.cnet.com/roadshow/news/bmw-access-subscription-plan-monthly/

4) Mercedes-Benz Collection (starts at $1,095/month)
https://www.businessinsider.com/mercedes-benz-car-subscription-service-…

5) Porsche Passport (starts at $2,000/month)
https://www.porschepassport.com/

Is it working?
The model is working for Volvo. The program now has a waiting list and ran out of its XC40 car models used in the pilot program. Cadillac however had to shut down its program. Experts say the high price of $1,800 was a barrier.
https://www.theverge.com/2018/11/13/18091464/volvo-care-subscription-se…

Industry challenges and implications:
The subscription model allows car makers to have a direct relationship with the customer, and allows drivers to have access to the car they want without committing to a purchase. However, this direct relationship between the car maker and driver leaves the dealership out, and they've been speaking out about this. So far, US three states are investigating automaker subscriptions, and Indiana has banned any such service until next year:
https://www.autoblog.com/2018/08/24/car-dealers-fight-automaker-subscri…

Comments (2)

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What can go wrong?
Ricardo Daza Hoyos
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  • Ditching dealers should be a problem in the near future, i bet those are the ones pushing regulations in Indiana.

    Maria Chercoles
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  • Yes, but car makers have to keep in mind dealers have been key to their success and operated the distribution system for years. It's going to be challenging to immediately cut dealers out of the system, and I can see more lawsuits and regulations happening.