No Money Down: Car Manufacturers Continue To Add Subscription Options
Whether it’s urban flight, working from home or avoiding mass transportation, the lifestyle changes brought on by the global pandemic are having an enormous impact on the auto industry. And as consumers adopt solutions that suit their new way of life, car dealers and manufacturers have made their own adjustments to meet the changing needs of buyers who may want to buy, lease or now subscribe to their vehicle of choice.
Nowhere is this financing flux more prominent than at Volvo, the Swedish subsidiary of China’s Geely Group, whose Care By Volvo program has caught the eye of customers and competitors alike by offering what it calls “the modern way to lease a car.”
“For one monthly payment you get your car with insurance coverage, maintenance and more. Plus, the flexibility to cancel after 4 months,” Volvo said when it launched the “flexible, all-inclusive subscription with no long-term commitment” plan in August.
Not For Everyone
Like any form of financing, car subscriptions are not for everyone, and are highly dependent on a driver’s geography (they’re mostly available in cities), mileage expectations and the type of vehicle needed. That said, with new and used car prices rising and expensive features and electric motors being increasingly utilized, the ability to control more car for less money out of pocket will always have a place in an auto dealer’s arsenal of options.
As much as Volvo’s subscription model is the first to be offered nationally, there is already plenty of competition in the space from rival manufacturers.
For example, Porsche Drive offers both a subscription option and a daily or weekly rental option that gives consumers the flexibility to drive one or as many Porsche vehicles as they desire. Like most subscriptions, the Porsche offering is all-inclusive, meaning no extra charge for insurance, roadside assistance or maintenance. But in a bid to meet the needs of its typically well-heeled clientele, the German sports car maker also offers “concierge delivery at a convenient time and place” via a click on the Porsche Drive mobile app.
Regional And Rental Response
Beyond the subscription plans being offered directly from the automakers, dozens of independent car services are also now available in cities and regions across the country, most of which own and manage a diverse fleet of used cars to meet a range of consumer style and price point requirements.
Santa Monica-based Fair, for example, is a FinTech company that allows customers to select the type of car they want, the miles they need and then set custom lease terms that range from one month to three years. By connecting dream cars with people’s budgets, Fair says it allows drivers to lease affordable used cars, from wherever they are, for as long as they want.
Not to be undercut, traditional rental agencies such as Hertz are also now offering subscription programs. The Hertz My Car program offers “worry free driving” and is touted as the “smart alternative to owning or leasing a car” via a 3-tiered pricing platform that ranges from $600 a month for an economy car, to $1400 for regular SUVs, large trucks or luxury sedans.
“We believe subscriptions will play a huge role in the widespread adoption of this new [electric vehicle] technology,” Carbar Founder and CEO Des Hang told auto industry trade publication The Driven, pointing to the relatively high price points (versus traditional combustion engine options) and concerns that the long-term reliability of the new technology is still unproven.
Under those scenarios, Hang said, the low-cost, short-commitment subscription option made a lot of sense.