Daily Insights

Subscription: Hit or Miss

By: Caroline Kellogg | Jun 20, 2019

The car buying process is still a hassle. Even leasing can be too much of a commitment for some.

While new purchase tools on brand sites can provide more clarity, new subscription models pledge to further simplify the process and save customers from opaque and involved pricing negotiations, according to Gartner L2’s report on the topic.  Lexus is the latest brand to announce a subscription service, letting customers “own” vehicles by paying a flat monthly rate. The brand’s program, Lexus Complete Lease, not only includes maintenance services and vehicle insurance, but also allows subscribers to swap out models at either monthly, weekly, or daily intervals; hypothetically, subscribers could drive an SUV during the week and opt for a sports car on the weekends. Mercedes-Benz’s similar subscription program, Mercedes Benz Collection, currently only in Nashville and Philadelphia, has gone a step further by offering to deliver a customer’s vehicle of choice directly to their driveway.

Despite these perks, and the media attention vehicle subscription programs generate, many are not yet operationally sound or cost-effective. Volvo’s Care by Volvo program is an exception, however, as it provides differentiated perks without breaking the bank. Although Volvo has yet to offer delivery and flexible car swapping like Lexus and Mercedes-Benz, the program boasts a greater mileage allowance than leasing and includes insurance and maintenance services. It is also open to customers nationwide, whereas other brands have only tested their programs locally.

Execution of these programs is important, but at these beginning stages, the marketing supporting these new initiatives is just as crucial. Most brands fall short in this arena. Volvo is the only tracked brand that clearly advertises its subscription service on its homepage. Brands should look to promote these initiatives across channels, using them as a marketing tool to signal their willingness to innovate.

See more: Auto , Volvo , Lexus , Mercedes-Benz