GTPNewsWire
Contributing Writer
- 20,192
- GTPHQ
This is the discussion thread for a recent post on GTPlanet:
This article was published by Joe Donaldson (@Joey D) on December 3rd, 2017 in the Automotive News category.
Volvo Introduces a Subscription Service With the New XC40
- Thread starter GTPNewsWire
- 14 comments
- 1,558 views
- 12,783
- Cambridge
- Moglet85
- Moglet
This sounds remarkably similar to Just Add Fuel which Peugeot have been running over here for quite some time now. I have no idea how popular it has been, it's not something I'd do myself but I can definitely see why people would want to use this method as it makes ownership very, very easy.
- 11,319
- Marin County
I'm honestly waiting for somebody to release a life-bundle subscription.
Netflix
Internet
Phone + Phone Service
Gym
Car + Gas + Insurance
Meal Delivery
Rent/Housing
It's getting outta control.
Netflix
Internet
Phone + Phone Service
Gym
Car + Gas + Insurance
Meal Delivery
Rent/Housing
It's getting outta control.
- 9,053
- Murica
- BasedAckbar
Is this Volvo’s response to the notion that this current generation are turning away from owning a car?
- 20,681
- TenEightyOne
- TenEightyOne
It seems to be. I know very few people with a new car who aren't leasing it. I suppose part of the offset for a brand new car is the several-thousand-pounds that you lose the moment you drive it.
- 12,783
- Cambridge
- Moglet85
- Moglet
What makes you think it won't work well, out of interest? I don't really know much about car ownership in the US other than it seems like a lot of people lease cars. But that could just be the same as Europe.
This sort of contract is the kind of ownership my wife would choose if she hadn't met me, she doesn't want to do anything besides put fuel in and hates the idea of having insurance, tax, servicing etc. as separate things. I can see the appeal of this method of driving but it's certainly not for me!
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Robin
Premium
- 16,799
- United Kingdom
Surprised this is a new thing in the US, nearly all new cars sold here are on hire purchase agreements where your basically pay a subscription and don't own it. Most car adverts only show the price in £ per month!
Personally it's not my cup of tea but it's good for those who want a fixed payment every month that often includes servicing and insurance so they don't really have to worry about car ownership, but as with all contracts you often end up paying more.
Personally it's not my cup of tea but it's good for those who want a fixed payment every month that often includes servicing and insurance so they don't really have to worry about car ownership, but as with all contracts you often end up paying more.
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- 5,844
- On the run
- NaveekDarkroom
I don't think the phrase "new lease on life" was meant to be so literal.
Possibly. Maybe they're not playing to that idea so much as just offering an alternative to traditional ownership.
Even if Volvo isn't the first to try this business model I can see the appeal.
- 84,390
- Rule 12
- GTP_Famine
It's not quite the same.
Car finance products of the type you're talking about are a product. You buy the car, then you buy the finance product to pay for the car. Technically the finance company owns the car, but you're the owner in exactly the same way that you're a house owner if you have a mortgage.
When your three years are up you can trade the car in against its market price (or guaranteed value) for another car/finance product, or pay off the lump sum to buy it (almost no-one ever does).
With Geely's business model for Lynk & Co and now Volvo, you never own the car. Neither does a finance company. Volvo owns it. You literally pay to lease the car for a year or two, and give it back at the end. Volvo pays for all the (reasonable) servicing, maintenance and repair because it owns the car and wants it nice for when it flips it down to a car supermarket.
Traditional car finance is buying a loan for a car you own, like a mortgage. This is renting.
- 12,783
- Cambridge
- Moglet85
- Moglet
Oh absolutely, Just Add Fuel is just a PCP with some bits added on (from what I know of it) and I can't see many customers making the balloon payment at the end. It'll be interesting to see if the Volvo scheme takes off, I know of quite a few friends who would love a proper rental system.
Joey D
Premium
- 46,703
- Boyne Falls, MI
- GTP_Joey
- GTP Joey
You can still buy an XC40 if you want too. It's not just subscription only.
The subscription service is actually cheaper than both buying and leasing an XC40. It's $14,400 if you got the entire 24 months with no money down and no insurance to worry about. If you take a similarly equipped XC40 an buy it, payments are $655 a month plus 10% down. Also you need to buy insurance for it which would be anywhere from $60-$200 a month depending on where you live.
- 256
- Bulgaria
I believe the upcoming Polestar will be initially subscription only, but let's see.
I guess this is as a model that can work for people who prefer driving new cars and don't really bother. Still I'd expect it to be more suited for brands like Renault etc whose design and tech get "worn out" faster.
I am normally more emotionally attached to my cars and besides preferring to pay upfront the whole sum and get a % off then go on and drive it for 7-8 years and when it comes to selling it's a drama. So that model is definitely not for me.
