June 11, 2018—Volvo on Thursday laid out plans to increase sales and boost profitability by 2025 by offering a broader range of vehicles and selling more to autonomous ride-hailing companies.
Volvo said it is planning for half of all sales annually to come from fully electric vehicles, and one third of all vehicles to be sold to be autonomous driving cars, according to a report by marketwatch.com. Additionally, roughly half of all Volvo vehicles sold will be under its new subscription service.
OEM subscription services almost always include regular maintenance from a dealership, which could be a significant threat to independent automotive repair shops going forward.
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.
Volvo said it hopes to build over 5 million direct consumer relationships by 2025, aided by its Care by Volvo subscription service, because, according to CEO Hakan Samuelsson, “customers’ expectations are changing rapidly.”
The automaker also expects to benefit from lower procurement costs, shared development costs, and economies of scale alongside Polestar, its performance EV brand, and Lynk & Co., the new car brand which Volvo owns 30 percent of.
Ride-hailing companies like Uber and Lyft see self-driving technology as critical to their long-term financial health, since paying drivers cuts into company profits. To make money in the future, Lyft and Uber will need to find ways to own these vehicles, which, as John Possumato, the founder and CEO of the MaaS startup DriveItAway LLC, points out, means they will need to find ways to service these fleets.
Uber and Lyft’s full foray into autonomous vehicles and self-owning fleets might be a ways off, but Possumato says independent shops and service centers at dealerships should be prepared anyway.