Volvo launched its new Care by Volvo subscription-based leasing service Wednesday at the L.A. Auto Show, making its brand-new 2019 XC40 the first vehicle available under the program, in which customers make a flat monthly payment that covers insurance, service and maintenance for 24 months, then exchange the car for a new model.
All-inclusive pricing starts at $600 per month for the XC40 Momentum package, before taxes and registration fees, and $700 per month for the R Design. Under the program, customers can go online and make an order, then drive away with their new car from a Volvo dealer without having to negotiate price, make a down payment or set up insurance. The program is launching nationwide in the U.S. and in seven European countries.
"You hear more and more that owning a car is not something that you really absolutely need," Volvo CEO Hakan Samuelsson told reporters at the show. "Important is that you can use the car and that you can have it.
"I think the mobile phones have changed a lot of how people see things. You don't necessarily have to buy it. You have it on a subscription, which is absolutely hassle-free and you know exactly what it costs, there is a flat rate per car, and after 24 months there is a new one, an updated new model."
Lincoln also announced its new subscription pilot program in L.A., but it's more limited, launching exclusively in California, and not until early next year. Lincoln representatives said pricing for that program had yet to be determined.
Volvo said the new program comes with 24/7 customer care and concierge services, including roadside assistance. Users will also have the option of changing cars and signing up for a new 24-month subscription as early as 12 months into the program. It also comes with an annual 15,000-mile allowance covering tire and wheel damage, wear-and-tear replacements including wipers and brakes, and all factory-scheduled maintenance. The program also sets aside money to cover dent and other repairs at the end of the subscription period, with repairs handled by Volvo dealers. Those cars would then go into Volvo's used car program, which the automaker eventually hopes to be part of the subscription service.
"The whole idea really based on the subscription is loyalty," said Anders Gustafsson, president and CEO of Volvo Car USA.
Insurance is being handled by Liberty Mutual and features $250,000 bodily injury protection per person and $500,000 bodily injury coverage per accident, with a $500 deductible for both comprehensive and collision coverage.
The 2019 XC40 arrives in U.S. showrooms in spring.