A Closer Look at Car Subscriptions
May 7, 2018—With car subscription services popping up in major markets like New York and Los Angeles, along with much of the South and Midwest, FOX News recently examined the new type of “leasing” option for automotive consumers. Specifically, the news outlet examined the benefits of subscription services versus buying for consumers.
“Subscription” services, of course, consist of a monthly fee paid by consumers, which usually grants them a warranty, maintenance, roadside assistance, a prescribed mileage allowance and, typically, insurance. Multiple OEMs have launched subscription services, including BMW, Cadillac, Porsche, Volvo, along with a Canvas program which offers Ford and Lincoln models. Mercedes-Benz is set to launch its “Collection” service in June.
Car dealership groups and startup companies are also getting in on the subscription trend. Currently, however, only Care by Volvo is available nationwide.
All of the aforementioned subscription plans stress convenience, but none claim to be a cheap way to have a car, FOX News noted. If consumers are approved for a subscription plan, the startup fee typically costs around $500, and monthly fees range from $250 to $3,700.
The three most common subscription models include:
- Flip services: These allow vehicle changes, sometimes within a month.
- One-car services: This is Care by Volvo’s approach, and offers an all-inclusive two-year lease for the upcoming 2019 Volvo XC40 for around $650 per month.
- Stay awhile services: An example of stay awhile services is exemplified by California-based startup companies like Canvas and Fair, which offer pricing that makes cars more affordable if a consumer sticks with them longer.
FOX News noted that, since subscription services and users vary so much, it’s tough to yet determine if subscriptions are cheaper than buying or leasing. Industry consultants at Edmunds, however, said that, if consumers want a vehicle with a minimal commitment, a subscription plan can make sense.