What makes a car subscription service good? Is it the variety of vehicles you can choose from? Is it the “flip” policy (how often you can change cars)? Or, is it simply a matter of price? Care by Volvo is trying to figure this out.
Highly compensated executives at the largest automotive brands across the globe are asking themselves these exact same questions, and their answer? No one is quite sure. However, Volvo Cars has decided to take a novel approach to their subscription service — make it a lease program and call it a subscription service.
Care by Volvo, the car subscription service from Volvo Cars is one of the least “subscription-ey” subscription services on the market. The service — essentially a glorified lease program — includes insurance and maintenance, and allows users to “flip” their Volvo annually.
However non-innovative their service is, no one can deny that it’s working. Growth for Care by Volvo has been better than expected, at least that is what Anders Gustafsson, CEO of Volvo Cars of North America is telling us.
Let’s break down Care by Volvo and fully understand what benefits you get from the service. Let’s also discuss some of the issues Care by Volvo may encounter moving forward.
How does Care by Volvo work?
Unlike their competitors, Volvo Cars has taken a rigid approach to their subscription service. Rather than allowing users to pay a monthly fee to access a portfolio of vehicles on demand, Care by Volvo allows its users access to one car per 12 month period. You sign up for the service online, or within the Care by Volvo app and immediately choose which model and trim Volvo you’d like to own for the next 12 months. Then, you make monthly payments for the privilege of driving the vehicle. After 12 months you can upgrade into a new Volvo.
In a nutshell, that is the program. Sounds a lot like a traditional lease, right?
What vehicles are included?
Currently, Care by Volvo offers two models; the S60 sedan and the XC40 compact SUV. Both models are available in differing trim levels; Momentum and R-Design.
The Momentum trim is Volvo’s entry-level option, while the R-Design is more expensive and geared towards a “sporty” feel.
Regardless of trim, the S60 sedan comes with the T6 powertrain, producing 316 hp and 295 lb. ft. of torque, riding on an all wheel drive platform. For the XC40, regardless of trim, you’re riding on the T5 powertrain, producing 248 hp and 258 lb. ft. of torque. The XC40, just like the S60 has all wheel drive.
What are the perks?
Care by Volvo offers a refreshingly simple approach to car ownership. Included in the service are a number of perks:
- Liberty Mutual insurance policy;
- Tire and Wheel Road Hazard Protection;
- 24/7 Volvo Concierge services;
- Factory Scheduled Maintenance, including wear items;
- Excess Wear and Use Protection at vehicle return;
- Upgrade to a new vehicles every 12 months.
The Liberty Mutual insurance policy is included in your monthly subscription fee and covers:
- Bodily Injury Liability: $250,000 per person; $500,000 per accident
- Property Damage Liability: $100,000
- Comprehensive: $500 Deductible
- Collision: $500 Deductible
- Underinsured/Uninsured Motorist: $250,000 per person; $500,000 per accident
- Required Medical Payments/PIP Coverage
- Rental Reimbursement Coverage
- Other state specific coverages as required by law
Tire and wheel protection are another great perk. Say you hit a pothole and get a bubble in your tire. Have no fear, your Care by Volvo subscription covers the new tire you’ll need to purchase. With your Care by Volvo subscription you’ll never buy tires again, Volvo will.
Volvo’s 24/7 concierge service is a bit more nebulous, and from all the research we’ve done a bit of a hollow promise. It seems that the concierge is only available to answer questions relating to your new Volvo, and that’s it. This isn’t OnStar or anything like that.
The other perks Volvo lists as part of the service are pretty self explanatory. Your monthly subscription essentially bundles all of these benefits into one.
How much does it cost?
This is where Care by Volvo begins to feel less like a subscription service, and more like a lease program…
The cost of Care by Volvo differs by which model and trim you opt for. From lowest to highest you can get:
- XC40 Momentum — $650/mo
- XC40 R-Design — $750/mo
- S60 Momentum — $775/mo
- S60 R-Design — $850/mo
Where can you get Care by Volvo?
Care by Volvo is available within the United States. It is not available internationally. There are no restrictions within the United States.
What you need to know before signing up
There are a few fine print items you need to be comfortable with before you sign up for Care by Volvo, the main one being your subscription comes with a 15,000 mile allotment. If Care by Volvo didn’t feel like a lease program before it sure does now. During your 12 months of “ownership” you cannot drive more than 15,000 miles. If you do, you’ll be charged an additional $.25 per mile.
It’s also important to recognize that you really are signing up for a “bundled” lease program. When we say bundled we mean that the other services/components of care ownership are factored into your subscription fee. Within Volvo’s online FAQ section they even say, “The Care By Volvo subscription is a lease…” So understand you will be paying a bit of a premium to simply bundle all of your automotive expenses into one monthly payment.
What issues will Care by Volvo face?
The car industry is flooded with off lease vehicles, and Volvo’s Car program will only further exacerbate that problem in a few years. As more and more individuals sign up for their service, Volvo and it’s dealers will be faced with a growing number of off lease S60 and XC40 models flooding their lots.
After speaking with the GM at my local Volvo dealership he was concerned that this flood of off lease cars will be tricky to manage. The traditional lease lasts more than 12 months (closer to 36), and that will lead to a big churn in vehicles entering the market. Volvo is certainly hoping that their depreciation charts hold up and that the off lease S60’s and XC40’s hold their value, otherwise Volvo is in for a world of pain.