Car subscription plans let users swap vehicles as often as they want

Monthly subscription services for cars, one of which allows users to swap vehicles as often as they like, have arrived on Long Island. 

The services compete directly with traditional buying and leasing. 

Volvo is the only current auto manufacturer with nationwide subscriptions, having begun service in New York State in the last few weeks by offering new vehicles for use. In addition, Fair, a California-based company that lets subscribers select from the used-car inventory at local dealers, arrived on Long Island a few months ago.

"The idea that we have to sign up for long-term commitments for anything is sort of becoming obsolete," said Scott Painter, founder and CEO of Fair.

Once a user selects a vehicle, Fair buys it and charges the subscriber an upfront "start fee" and then a monthly fee for the vehicle's use,  maintenance plan and roadside assistance; insurance can be included for an extra fee.  The user can return the vehicle at any time, either selecting a new one (and paying a new start fee) or canceling the subscription altogether.

When a customer turns in a vehicle, Fair resells it at auction, a Fair spokesperson said.

A recent check of Fair’s listings found Long Island deals ranging from $145 a month for a 2013 Honda Fit Sport (with a $580 start fee)  to $1,340 a month for a 2017 Land Rover SVR (with a $5,360 start fee).

Volvo has taken a different approach in its program, called Care by Volvo, which basically resembles a one-year lease plan. Rather than offer all of its models, Volvo instead only offers subscriptions for its S60 sedan and XC40 SUV, and users may change their vehicle after 12 months. 

“We found customers in the buying process… found their options overwhelming,” said Jim Nichols, Volvo's product and technology communications manager. “We said OK, we’re going to take two cars, we’re going to spec them out the way the average customer specs them out, and we’re going to boil everything down so then all you have to do is choose the interior color and exterior color, and that’s basically it for one flat rate.”

The monthly payment — $750 for the S60 or $700 for the XC40 — gives subscribers the use of the car, maintenance, tires, windshield wipers, and insurance through Liberty Mutual.

For comparison, if you bought the S60 for its starting list price of $35,800  and financed the full amount  with a 60-month loan at 3.11 percent interest, your monthly payment would be around $645. You'd be getting equity in the vehicle,  but you'd also be paying separately for maintenance and insurance. 

While Volvo is going all in on vehicle subscriptions, Patrick Olsen of Consumer Reports said most automakers are being cautious in adopting the subscription model.

“Only Volvo is truly nationwide with their service; everyone else is trying them in test markets," he said. "It’s one thing to spend $10 a month for the latest in TV; it’s another thing to spend $600 or more a month on cars, and I think they’re trying to see if it scales up to that price level.”

Olsen does see some benefits for consumers in the subscription model, especially those who like to get behind the wheel of different models.

“You’re not committed to one particular car for a minimum of three years or longer ... so it gives you a chance to try out different cars," he said. "If you’re a heavy spender and you’re trying the Porsche program or the BMW program, you’re getting into some pretty cool cars and you get a sense of which attributes you like and which one you’d like to stay in longer or continue to play the field."

Volvo's subscribers are about 10 years younger, on average, than its traditional buyers, Nichols said;  95 percent of subscribers are new to the brand.

Fair’s subscribers fall into three primary categories, Painter said: millennials, "early adopters" of technology, and those who drive for ride-hailing services like Uber and Lyft.  

Volvo and Fair declined to put a reporter in touch with any local subscribers.

Fair, which in December received $385 million in financing from SoftBank, said it has 20,000 subscribers in 26 cities in 16 U.S. states since starting subscriptions in 2017. Volvo has met its first-year subscription projection in just four months, according to Nichols, who would not reveal the number of subscribers. 

Still, others are moving more slowly on the subscription model, as Cadillac's program, Book, is no longer taking new subscribers after launching in 2017, while Mercedes-Benz Collection is still in pilot status in Philadelphia and Nashville, according to a spokesman.

It's impossible to predict if subscriptions will become a major way to get vehicles in the future, or remain more of a niche product, Olsen said.

“All these automakers are putting their toe in the water because they can’t see the bottom,” he said. “It could go either way; it could be a common thing that people do, or, hey, we tried that, it just wasn’t perfect for the type of cars we were trying to sell or the way we were trying to sell them."