Subscribing to a New Mobility Model

Forget about buying or leasing a new car or truck.

Forget about buying or leasing a new car or truck. Such traditional ownership models may soon become passé. In addition to car- and ride-sharing, a new trend is emerging: subscription-based services. These programs bundle ownership expenses into a flat monthly fee—without a down payment or long-term commitment—that can include everything from insurance and maintenance to a variety of concierge-type services. Vehicles are delivered directly to customers. Some plans allow members to exchange vehicles upon request and can even include access to a personal chauffeur. 

Last fall Volvo launched its Care by Volvo subscription service in Europe and the U.S., starting with the all-new 2018 XC40 compact crossover vehicle. The two-year plan costs $600 to $700 per month (excluding taxes and registration fees) with a 15,000-mile annual driving allowance. Customer care includes 24-hour roadside assistance and a telematics-based concierge feature. Wear and tear items, such as replacing windshield wipers, also are part of the deal. Subscribers order their vehicle online and will have the option of switching from one model to another after one year. At the end of the subscription, users can walk away, extend the deal at a cheaper rate, buy the car outright, or sign up for a new model. 

Cadillac and Porsche also offer plans. They are more expensive, but provide more flexibility and vehicle choices. The $1,800 per month Book by Cadillac Service gives subscribers on-demand access to several of the luxury brand’s vehicles. The month-to-month subscription, which can be canceled at any time, covers registration, insurance and vehicle detailing. Customers use a smartphone app to request a vehicle, which they can swap out as many as 18 times per year with a monthly driving limit of 2,000 miles. Cadillac says more than 8,000 people—90 percent of whom are new to the brand—expressed an interest in the program during its first eight months. 

Porsche launched its pilot program in Atlanta last November. The base Porsche Passport plan costs $2,000 per month, which gives members access to eight vehicles. For $3,000 per month, customers can drive 22 models, including the 911 Carrera S sports car and Panamera 4S sport sedan. Both plans require members to pay a $500 activation fee. The plans cover insurance, maintenance, vehicle detailing and unlimited mileage. 

Ford’s Lincoln luxury marque will begin testing its subscription plan early this year in select California cities. The month-to-month subscription will cover insurance, maintenance and roadside assistance, and allow members to periodically swap out vehicles. Separately, Lincoln is testing a “Personal Driver” plan in Miami, San Diego and Dallas that allows customers to arrange for a driver to chauffeur them around town in their own vehicle. Drivers also can be tasked with running errands for the owner. 

Ford dealerships also are getting in on the action with the Canvas used-car subscription service that Ford Credit purchased in 2015. Dealers provide three-year-old or newer vehicles for the program, starting at a monthly rate of $400 depending on model and term length. The service currently is only available in California. 

Flow Automotive, a North Carolina-based dealership group, launched its Drive Flow subscription service in 2015. Subscribers can choose between the base $850 monthly plan and a premium $1,500 service for upscale vehicles. The program’s software platform was developed by Atlanta’s Clutch Technologies, which also provides the technology for Porsche Passport and several other services. Clutch’s app recommends different vehicles to users based on their profile and requirements. 

Another dealer group, Holman Automotive, is partnering with Atlanta-based Cox Automotive on Flexdrive. The service, which initially was marketed to Uber drivers, allows users to book available vehicles—650 models from about 20 brands—with no mileage limit for as little as $219 per week for a 2013 Ford Fusion. Members keep a vehicle an average of about two and half weeks. Holman aims to expand Flexdrive to 500 locations nationwide this year through its own dealership network and other groups. 

Other automakers, dealer groups and startup companies also are planning vehicle subscription services. Such plans promise to build long-term relationships with providers, while giving customers more options and flexibility. The more alternatives the better.