Volvo Wants You To Buy Their Cars Like The Way You Buy Your Phones
The way we have been buying smartphones for the past two to three years is having a big influence on how we might be buying cars in the future. The "subscription" based concept of paying a monthly fee for a set number of months for your phone and allowing you to upgrade the equipment when the next one comes out, is something Volvo is looking into with their "Care By Volvo."
It works like this:
The program starts with the 2019 Volvo XC40 compact SUV, and it will be available in the U.S., Sweden, the United Kingdom, Germany, Spain, Italy, Norway, and Poland.
The subscription program runs for 24 months with a 15,000 mile per year limitation. Just like Verizon's "Edge" or AT&T's "Next" phone buying program, "Care By Volvo" allows you to sign on to a new 24 month program after the first 12 months are up.
There is no down payment to "lease" the car, instead the program starts at a monthly payment of $600 (before tax and registration fees) and includes insurance and maintenance. Insurance is maintained by Liberty Mutual offering $250,000 bodily injury protection per person and $500,000 bodily injury coverage per accident. And a $500 deductible for both comprehensive and collision coverage.
- $600/month for: 2019 Volvo XC40 T5 AWD Momentum with Premium Package, Vision Package, heated front seats and heated steering wheel, panoramic roof and 19-inch wheels.
- $700/month for: 2019 Volvo XC40 T5 AWD R-Design with Premium Package, Vision Package, Advanced Package, heated front seats and heated steering wheel, panoramic roof, Harman Kardon Premium Sound and 20-inch wheels.
At the end of the 24 months, if your car is still in good condition, you get a new car.
A program for the younger generation
If you're male and under 25 then you know how much the car insurance world thinks you're the world's worst driver and are borderline uninsurable. Your insurance premiums might just be more than the cost to own/operate the car from a monthly payment's perspective. With Volvo's new car subscription program, the insurance is independent of who you are and where you're located. As someone who experienced his early twenties with soaring high insurance premiums, ~$300 (clean record, by the way), this program is an amazing idea for someone who's just starting out in their professional career.
The monthly cost of $600 might sound pretty steep for the under 25 generation, but given that it includes both the insurance and maintenance costs, and requires no down payment up front, this program will actually be cheaper than you'd think. It certainly will be a boon for Volvo. Not only will it foster deep brand loyalty, as subscribers will stay within the program to keep getting newer and newer Volvos, but it will also add value to their other services, like their dealerships, to keep their doors open.
In the end it all comes down to the buyers. Will a subscription model make you get into a car that you'll never own? Let me know your thoughts