Auto Subscription Services

Up until now, there were three ways to purchase a new or used car. One, an outright cash purchase; two, financing through a bank or credit union, and three, leasing. There is now a fourth option: auto subscription services.

Subscription services are similar to leasing in that you don’t own the car but you have the use of the car for a specified period of time. Most subscription services have an all-inclusive monthly fee, that includes insurance, roadside assistance, and maintenance.

Some subscription services offer the use of different models of cars. The service requires a short notice from the client in order to reserve another model car of that car brand. In many instances, the car is delivered to you by a concierge.

Book by Cadillac was the first auto subscription service. In 2018, when it was first introduced to the market, it cost $1800 per month, and the customer had the use of five models, including the XT5.

Subscription services are available in a limited number of locations, but there is a steady flow of new subscription services cropping up. Among the new services are:

  • BMW: Access by BMW, introduced in April, 2019, in the Nashville market area.
  • Mercedes-Benz is test marketing its subscription service in the Nashville and Philadelphia area.
  • Audi, Audi Select, introduced in September of 2018, in the Dallas-Fort Worth metropolitan area.
  • Ford, Canvas, introduced a used car subscription service, operating in the San Francisco/Los Angeles market.
  • Lincoln recently entered the auto subscription market using the Canvas service. The service employs 2015 and 2017 used Lincolns in the San Francisco/Los Angeles metropolitan area.
  • Porsch’s car subscription service, called Passport subscription service, is only offered in Atlanta, Georgia.
  • Volvo’s “Care by Volvo” is available nationwide. Customers can choose the 2019 Volvo XC40 Luxury SUV and the newly designed 2019 S60 sedan. Volvo is also panning on offering the all new 2019 Volvo V60 wagon in its subscription program. In addition, Volvo’s new electric car brand Polestar, will offer a subscription pan for its 2020 Polestar 1 and Polestar 2 electric cars.
  • Lexus will offer the all-new 2019 UX subcompact in a subscription plan.
  • In 2019, Jeep will introduce its own subscription plan called Jeep Wave.

New auto companies and dealer groups are also offering subscription services.

  • Fair, based in Los Angeles
  • Flexdrive
  • Clutch Technologies: Clutch, Atlanta
  • Drive Flow in North Carolina
  • Wyler Fast Lane in Cincinatti

 

 

There are numerous other companies and subscription services on the market.

The “pros” of a car subscription service:

  • Convenience: Most services allow you to apply on line and manage the account with a smart phone app. And, in most cases, the cars are delivered to you.
  • Flexibility: You can change cars more frequently than purchasing or leasing.
  • Possible Cost savings: There are no deposits or down payment.
  • Negotiation Free: There are set fees.
  • No Long Term Commitment: The shortest subscriptions are one month.
  • Ease of Approval: Especially for customers with poor or damaged credit. Approval is much easier than with leases or finance options.

 

The cons of a car subscription service are:

  • People who prefer ownership of a car finance it and then pay it off. They have no payments after paying the car off. People who prefer to own a car do not like subscription services.
  • Restrictions: If you don’t like restrictions, car subscription services are not for you. These services have numerous rules that must be adhered to and, in many cases, tracking devices are an integral part of the service.
  • Switching Cars: If you are not interested in switching cars, then this service is not for you.
  • Fees: All fees are set and non-negotiable so, if you prefer to negotiate the price, and wait for sales, then this service is not for you.

 

How much do auto subscription services cost?

The cost varies by the individual subscription service and by the model chosen.

A few examples:

  • Access by BMW is a tier style subscription service. The first tier starts at $1099 per month. There are also $1399 tiers and $2699 tiers. Vehicles available are the 330i, X5 and 5 series. The most expensive tiers give you access to the largest variety of cars.
  • Audi Select is a set fee of $1395 per month. You can choose from the A4 sedan, the A5 Cabriolet, the Q5 and Q7 SUVs and S5 coupe. There is also a cedit for Audi rental cars at different airports.
  • Book by Cadillac is also a set fee of $1800 per month. You can choose from six different models.
  • Care by Volvo is a set fee of $650 per month for the 2019 XC40 on up depending on the model.

 

Note: Price wise it is very difficult to compare car subscription services to financing and leasing because of the different variables involved such as; model, selling price, term of service and down payment (with financing and leasing), to name just a few.

Car subscription services do not guarantee the use of a brand new car with no miles on it. In this sense, they remind this writer of long-term car rental agreements. Volvo is the only service that allows you to drive a brand new vehicle. With Volvo’s “Care by Volvo”, you drive a brand new car for 24 months with the option to change to another new Volvo model in 12 months.

Most services, like Ford’s Canvas and Lincoln’s Canvas, are strictly used car subscription services. Some subscription services use 2019 models but the customer may not be the first person to drive the car. Most services offer cars that are less than three years old.

When applying to an auto subscription service, your credit card and driving history are thoroughly checked because the subscription company wants to make sure that the clients are safe drivers and are financially secure. Each service requires a credit card to open an account (for payment). The customer has to agree to allow the subscription service to periodically check their driving record.

Similar to leasing, auto subscription services have mileage limitations. Many companies have programs where mileage limitations are set by the customer and the cost is built into the monthly fee. Some services, like Care by Volvo, have monthly or annual mileage allocations, and there are mileage surcharges if you go over the mileage allocation. There are some subscription services that have no pre-set mileage restrictions.

Many subscription services put restrictions on how you use the car. Because the cars are changed on a fairly rapid basis, the companies want to make sure that the cars are kept in good condition. There are ” no smoking” restrictions, restrictions on who drives the car, and pets must be kept in carriers unless they are service dogs. Most subscription services track the car so they know the location of the car at all times. This is important in case the car is stolen or if a customer’s credit card is declined or to monitor erratic driving behavior that may violate the subscription agreement. Most subscription plans include insurance in their monthly fee.

In conclusion, auto subscription services are alternatives to conventional financing and leasing programs. Auto subscriptions, in this writer’s opinion, fill a small niche in that they provide a relatively select number of customers the opportunity to drive a distinct variety of cars. The cars offered are late model luxury cars at premium prices. It is this writer’s opinion that the main appeal of auto subscription services is the ability to “get in” and “get out” of a variety of cars. And, for this service, customers pay premium prices. As I said earlier, this service is for a select group of customers, those people who want what this type of service offers. The overwhelming majority of customers, I believe, will not find auto subscriptions an attractive alternative to conventional financing and leasing.

Happy Motoring!

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