Care by Volvo subscription service a hit in the US
Pioneering trial of Care by Volvo sees year's allocation of vehicles snapped up in less than four monthsVolvo claims it's struggling to cope with unprecedented demand for the Care by Volvo subscription service it recently launched in the US.
Speaking to
, Volvo Cars of North America CEO, Anders Gustafsson, confirmed that Care by Volvo customers were now facing waiting lists that stretch into 2019 after the first year's allocation of cars for the subscription was snapped up in less than four months.Care by Volvo is seen as challenging traditional ownership models as it offers users -- on a subscription basis -- its vehicles for a single payment of $650-$850 ($A900-$A1200) per month.
That might sound expensive, but the price bundles in the car, insurance and all maintenance costs into the Care by Volvo subscription payment. The deal, which locks customers into a two-year agreement, also lets users swap their vehicle for a new Volvo after just a year.
Unfortunately, in the candid interview Gustafsson admitted that as well as the new challenges of managing the backlog of orders, Care by Volvo has created tension with dealers.
"Growth is fun but it can also complicate things," said the Swedish car-maker's CEO.
While he wouldn't be drawn on specific numbers, he said Care by Volvo was upsetting the US dealer network as it robbed traditional sales channels of 15 per cent of all the SUVs imported and 10 per cent of the available XC40s.
To help address their concerns, Gustafsson says he's spent most of 2018 travelling to meet dealers to explain how they fit in the company's plan to create revenue streams outside of traditional car sales.
"They're afraid we're going to take something away from them.
"Our retailers are asking, 'Please let us be involved, because we can help'."
Gustafsson's solution is to use the dealers to ensure the vehicles are quickly re-subscribed after the first year, or offered for sale once they're returned.
According to the Swedish CEO, many Care by Volvo customers are coming to the subscription service via the car-maker's app.
The surprise success of Care by Volvo follows Cadillac's recent decision to kill off its Book by Cadillac subscription service that mirrors its Swedish rival but charged a far higher $1800 ($A2500) monthly fee.
Unusually, unlike other services, the Care by Volvo service only allows one vehicle swap per year, making it more profitable. Other rival services, meanwhile, allow swaps almost on a daily basis -- if users are prepared to pay for it.
Volvo's Australian operation has already announced that it is keen to bring the program to Australia although it, like its US counterparts, is struggling to understand how it could fit in with the national dealer network.
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