• Care by Volvo is a premium monthly fee to access car and services
• Offers flexibility around car use
• Subscription services provide alternative to leasing
• BMW and Mercedes also considering subscription services
• Volvo MD Jon Wakefield (below) explains the thinking behind Care by Volvo

IT started off innocently enough: hidden away in the announcement of Volvo’s new Polester electric performance brand was the fact that if you wanted one of these cars, it could be only ordered online, and was offered on a two or three year subscription basis.

No buying, no leasing, no cash-only-what’s-the-discount, and no deposits.

Just an all-inclusive subscription covering features such as pick-up and delivery, servicing, and the ability to rent alternative vehicles within the Volvo and Polestar range, but all incorporated within one monthly payment.

And now it’s the moment for Volvo Cars to launch its own subscription service. It’s using the launch of the new Volvo XC40 to roll out its new ‘Care by Volvo’ subscription service.

“This will make having a car as transparent, easy and hassle free as having a phone: a national, ready-negotiated monthly fee, combined with getting a new car every 24 months,” explains Volvo managing director Jon Wakefield.

“After ordering online, Care by Volvo customers will be able to drive away in a new Volvo without having to worry about the traditional extras such as deposits, insurances, taxes, service fees and so on.”

That’s not all.

Care by Volvo will, depending on regional availability, offer customers a range of digital concierge services, such as fuelling, cleaning, service pick-up and e-commerce delivery to the car.

Meanwhile, XC40 drivers will also be the first Volvo customers who can share their car with friends and family with a new digital key technology; the sharing tech comes as standard for Care by Volvo customers.

Will Care by Volvo change patterns of usership?

“If you look at the way market has moved it‘s already moved towards a usership based experience. You don’t own, you use.

“So the question is, how do you take that wrapper of services and deliver it for a premium with a really interesting basket of products to the busy and affluent consumer of today and tomorrow?”

Wakefield says Care by Volvo will be launched in London first where residents are time poor.

“I can see the market opportunity to supply something more than one car. There’s flexibility – no rigid timescales, for example, as it’s an open subscription. And subscriptions can be changed after six months to give customers credits to use on an XC60 for several weekends.

“What’s more all of this can all be done digitally and supported logistically by dealers.

“There are other areas such as in car delivery that will benefit city dwellers. So when the Wine Society delivers my case of wine they leave it in the greenhouse – but in London, where do they leave it? So these are the services that sit behind the subscription.”

What are the subscription models to Care by Volvo?

Jon says Volvo is looking at several levels of subscription, which can cover new Volvos and used Volvos.

“For business owner in London this really could have great benefits. For example if they need the car during the week but not weekends, how could we utiltise this asset when it’s not required?”

Much of Care by Volvo appears to be the OEM taking back direct control of the customer, while leaving out the usual middleman, the dealer. But Wakefield believes this is not the case.

“Retailers have a big part to play,” says Jon. “Our retailers are good at delivering cars in rush hour in a complex transit zone. So some of their income might be from service income rather than selling the car in the future. I’m excited by looking at the fabric of our retailers in the future.”

Is Care by Volvo taking out traditional finance routes? Is this a threat to leasing company models?

“Possibly,” acknowledges Jon. “Leasing companies are moving inexorably towards the provision of personal contract hire as demand ramps up. So I think we are going side by side with Care by Volvo rather than head to head.”

However, the entry point for Care by Volvo is certainly premium. Anyone used to scanning the web pages of the leasing brokers for the best deals available for a car lease will possibly wince at the introductory rate of £799 per month.

But there’s no deposit to be paid on a First Edition model and the monthly rate includes insurance and two weeks of an XC90 plus all pick up and deliveries.

“So a highly premium product,” acknowledges Jon.

Who else is looking at subscription services?

No doubt leasing companies will be looking with interest at the outcome of how these subscription services will work.

Already Porsche is trialling a mobility product in London called Porsche on Demand, which is powered by the Gett ride hailing app. Available only to Porsche owners, it provides premium executive transport from £20.

In the US, BMW and Mercedes are joining Cadillac, Lincoln and Porsche in offering a subscription service as an alternative to the leasing route, reports AutoBeat Daily.

Meanwhile Ford is piloting Canvas in LA and San Francisco with its pre-owned cars

In outlook, subscription services such as Care by Volvo are part of the exploding mobility offerings now available to consumers. It offers customers flexibility – but unlike other mobility functions, it ties them to the car manufacturer.

Christian Wardlaw, writing in JD Powers Car Newsletter, explains that a car subscription “blends aspects of leasing with aspects of renting, aiming to bring simplicity to your life”.

No wonder OEMs are keen to make subscription services work. And leasing companies need to consider their response.

What Volvo says about Care by Volvo

• Care by Volvo is a new premium subscription service and differs from existing lease offers in a number of important ways.
• Care by Volvo offers a convenient package of services allowing customers to enjoy their car while Volvo Cars handles everything else.
• Private leasing is an entry level offer without any additional services included in the price, while even full service leasing covers only parts of the services available in Care by Volvo. For example, none of the digital services to be offered via Care by Volvo are currently part of leasing packages.
• Care by Volvo will also encompass flexibility and customers will be allowed to switch cars temporarily depending on their needs.
• Care by Volvo also removes the practice of price negotiations. Customer research shows that this is one of the elements of the car-buying process that customers dislike the most.
• Care by Volvo has no customer age or geographical price differences.
• Care by Volvo has national standard prices as well as a unified price in Eurozone countries.