Volvo showed off its newest SUV — the XC40 — at the LA Auto Show 2017 to much praise from the automotive world. However, it also debuted its newest ownership scheme: a subscription method known as Care by Volvo.
Care by Volvo works almost exactly like mobile phone plans do in the US. For a set monthly fee you get a vehicle, insurance, maintenance, and pretty much everything else except fuel.
For many gearheads, this probably isn’t the route we’d ever want to go. Working on your vehicle and making it your own is all part of the joy of car ownership. However, for a large part of the population, this is a fantastic method. It also should serve Volvo well too, in the long run.
So how does it work? Well, you pop into your local Volvo dealer and decide on the XC40 you want. After picking out the trim level you’re then presented with a contract that shows payments of $600 per month for 24 months. You sign it, pay the registration fees, and then drive off the lot in your-but-not-really-yours XC40.
When maintenance time rolls around, just ring up your local dealer and schedule an appointment. They’ll take care of everything you need and you’ll be on your way. You even have the option for them to come pick your vehicle up for you. One the service is complete, they’ll even return it back to your driveway.
For those that have zero interest in the hassle associated with ownership, this is pretty much ideal. You basically get a vehicle to use as an appliance without any worry.
The best part of the subscription service is that you’ll also have the option to switch vehicles after 12 months. You will need to sign a new contract and we assume there are some fees associated with it. But, you don’t need to worry about selling or trading in your vehicle.
This method is also sustainably cheaper and easier than a traditional lease as well. Assuming you go for the base XC40 Momentum trim, you’ll pay just $14,400 over the two-year commitment to the vehicle. This is on par with a standard 36-month lease of a base level S60. However, with that lease, you’ll need to pony up nearly $4,000 up front and pay for insurance. Also, you’ll only get 10,000 miles per year, unlike the Care by Volvo which allows for 15,000.
With the subscription method, no down payment is required either. This is definitely attractive for those who’d rather not pay a bunch of money up front.
To further put this into perspective, a similarly equipped XC40 would command $655 per month with $3,945 down over the course of 60 months. You’d also need to buy a maintenance plan, insurance, and anything else that comes up with the vehicle.
Besides benefitting the consumer, this scheme also benefits Volvo. Making sure the subscription fleet is always up to snuff with their maintenance will mean they’ll be easier to flip in the used market. Also, dealers won’t need to worry about getting in a non-Volvo vehicle on trade-in or even coming up with the cash on a trade-in period.
The Chinese parent company for Volvo, Geely, is seemingly a fan of this type of service. Another luxury car company of Geely’s, Lynk & Co., will offer the same subscription model whenever it gets around to producing its first vehicle, the 01.
While we can see it working well for the premium car industry, time will tell how successful this model will end up.