What Are Vehicle Subscriptions, and How Do They Work?

can be reached at bev_b@outlook.com
can be reached at bev_b@outlook.com
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There is no shortage of ways to get around.

From the old-school methods of walking, riding a bike, taking the bus, and hailing a cab to this-is-the-future hoverboarding, bike sharing, app-swipe my ride, and, um, back to walking. Regardless, even the landscape of vehicle ownership has changed. Where there was once only buying or leasing, we now have the rent-your-own-fleet option known as a vehicle subscription.

The Basics

After wading through a stream of slumping sales that started in 2008 before rising again in 2012, can the automotive industry really expect to continue moving 17-million-plus vehicles a year? Even the most wishful of thinkers know the end is nigh for that kind of new car volume. Considering the volatile nature of the retail auto market, car companies must get creative to retain consumer interest. If not with sales, then at least with product utilization. And vehicle subscription programs are the latest trend to fit the bill.

Working in much the same way as any other subscription service (e.g., Blue Apron for cooking, Dollar Shave Club for grooming, Quip for dental hygiene), the automotive version involves a recurring fee that allows the subscriber a choice of vehicle(s) for the length of their chosen plan.

The monthly charge is typically all-inclusive, covering insurance, maintenance, roadside assistance, as well as vehicle delivery and pick-up. Additional charges and restrictions can include a one-time enrollment fee, minimum contract terms, and mileage limits.

In return, however, subscribers may have access to a hand-selected fleet of vehicles from which to borrow. This offers flexibility, should vehicle needs change from a daily-commuter sedan to a road-trip crossover to a tailgating party van. There is also peace of mind, since negotiating and price haggling are not necessary when you sign up for the program.

And, unlike with Rent-a-Center, the subscription fees do not go toward paying down the cost of the vehicle because it remains the property of the respective car company or third-party supplier throughout the duration of the agreement.

The Players

Mercedes-Benz Collection vehicle subscription serviceAlthough a majority of the automaker subscription programs are offered by premium and luxury brands, accessibility is still limited to major cities. For example, at the start of 2019 the Mercedes-Benz Collection is currently available only in Tennessee and Pennsylvania. (Mercedes-Benz)

Interestingly, vehicle subscription is one area of the automotive realm where manufacturers are not playing catch-up. As these legacy companies appear to be scrambling to keep pace with nascent startups when it comes to autonomous vehicle technology and even ride-sharing programs, a good number already have subscription services in place, but many are premium luxury brands.

Audi, BMW, Cadillac, Jaguar Land Rover, Lexus, Mercedes-Benz, Porsche, and Volvo all currently have subscription services. With these nameplates, it’s clear that initial offerings are meant to attract clientele with deep pockets.

BOOK by Cadillac, which was one of the first programs when it launched in 2017, cost $1,800 per month and included door-to-door delivery/pick-up, insurance, maintenance, and up to 18 vehicle swaps a year. However, Cadillac has suspended new membership in this service until further notice, potentially in order to revise the program given the discontinuation of the V-Series versions of the ATS Coupe and CTS after the 2019 model year.

The Mercedes-Benz Collection, on the other hand, costs much more but offers multiple pricing plans, a larger fleet that includes performance-tuned AMG models, no mileage limits, and month-to-month payments. Plus, vehicles can be reserved as late as noon the day prior to delivery. Packages also vary by region. For example, in Philadelphia, in January of 2019, the available Reserve and Premier plans start at a before-taxes $1,595 and $2,995, respectively. In Nashville, Premier is not offered and subscriptions start with a Signature package for $1,095.

On the “affordable” end of the subscription spectrum is Canvas, which is backed by Ford Credit. Canvas offers used, off-lease Ford and Lincoln vehicles that are a few years older than the luxury automakers’ (but not decades old like your rust-bucket from college).

Like other programs, insurance and preventative maintenance are included, but unlike the others, Canvas is more flexible to subscribers’ needs. Monthly pricing is calculated by selecting vehicle type, subscription length, and mileage package. For example, a “base” package would be a 12-month ($50) sedan subscription ($329) with a 500-mile-per-month limit ($0). The monthly total before taxes comes to $379. By comparison, opting for a month-to-month, unlimited mileage luxury (aka Lincoln) vehicle would run you $984.

Then you have smaller third-party companies like Flexdrive, Less, and Borrow, which are not only regional but niche. For example, Flexdrive, which feels eerily like traditional rental car companies with its week-to-week subscriptions, is available in several cities, including Atlanta, Dallas, Miami, Philadelphia. and Sacramento, while Borrow’s electric car fleet currently operates only out of Los Angeles.

The Flexibility (and Flaws)

Ford Canvas vehicle subscription service vehicle deliveryUsing older vehicles, third-party companies like Ford Credit-backed Canvas provide a cost-savings compared to luxury automakers’ subscription programs and may even offer more flexibility with a-la-carte offerings and fewer restrictions. Plus, cool Mustangs! (Ford)

Subscribing to a vehicle is a relatively new concept and, as new things generally go, prices out the everyday consumer as an early adopter. Availability, regardless of provider, is still limited to select cities, too. Additionally, with nearly all programs you’re unlikely to be the first person to get behind the wheel of your vehicle of choice as few examples in the fleets are showroom fresh.

With OEM-backed programs, the vehicles are no more than three model years old, so they’re still relatively new. Those in third-party fleets tend to be older with more wear and tear, though. But prices are lower and those more affordable plans still cover the basics (insurance, oil changes, etc.).

Do keep in mind that there also may be credit and driving record checks, age restrictions, pet-carrier requirements, and limitations on driving destinations. Vehicles might not be allowed in Canada or Mexico, for example, due to company policies and insurance coverages.

However, if you have the discretionary income but don’t want to commit to a new-car purchase or lease, a subscription plan may offer the right amount of flexibility and product experience prior to making that final purchase decision. Or not. Perhaps the idea of having a fleet of cars at your disposal – but without the responsibility – might be an attractive enough argument on its own.

About the Author

can be reached at bev_b@outlook.com
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