Volvo made waves at the LA Auto Show by launching its new Care by Volvo subscription service, an all-inclusive alternative to conventional leasing that covers insurance, routine maintenance and service for a flat monthly fee starting at $600. It's similar to subscription services already offered by Cadillac and Porsche, though at a significantly lower price than both. And with its nationwide rollout, it's more comprehensive than the pilot program Lincoln plans to launch in parts of California next year.
We spoke to Volvo officials to find out how the subscription program would work, how it differs from standard, conventional auto leasing, and what the advantages and disadvantages are.
How exactly will the subscription service work?
Volvo is using the 2019 XC40, its new compact crossover, as the first vehicle offered under the program, and in two models: the T5 Momentum, which starts at $600 per month, and the T5 R Design, which starts at $700. Customers can go to Volvo's website to make their choice and pick interior and exterior colors. But both models are optioned only one way: the Momentum with Premium and Vision packages, plus a sunroof and 19-inch wheels, and the R Design with those same features plus the Advanced Package, a Harman Kardon sound system and 20-inch wheels. Mileage allowance is 15,000 miles per year.
You enter all your information online and leave a $500 deposit, which goes toward the first month's payment, then pick up the car at either your nearest Volvo dealer or one of your choice when it arrives after several weeks (though the XC40 won't hit the market until next spring). Subscriptions go for 24 months, though customers will have the option of switching cars after 12 months and into a new, 24-month subscription, by which time Volvo anticipates offering more models under the program.
How does this differ from a conventional lease?
Aside from the $500 deposit, there's no down payment. And Care by Volvo, the company says, covers everything — monthly vehicle payment, maintenance (including oil changes) and wear coverage, including tires, brakes, wiper blades, road hazards, 24/7 concierge service and roadside assistance, plus insurance through Liberty Mutual. The policy 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. Volvo also says the flat rate covers expected damage repairs at the end of a subscription period, though how far that coverage will actually go remains to be seen.
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How do the costs compare?
For leasing customers, Volvo plans to offer the base XC40 T5 Momentum at $325 per month for 36 months with $3,000 down. (With no money down, that monthly rate climbs to $600 — the same as the subscription fee.) Looked at another way, over the 24-month subscription, you're spending $14,400 on a car that retails starting at $35,200. Compare that with with $14,700 total over 36 months for the conventional lease, including the $3,000 down payment but excluding insurance, maintenance and repairs.
Choosing metallic paint increases the monthly subscription rate slightly.
And with either form of lease, customers are responsible for taxes, titles and registration fees at the dealership.
Can you buy the car at the end of the subscription?
Yes, and it's priced accordingly, with depreciation factored in.
Will the $600 and $700 flat monthly rates go up with inflation, or as more expensive new models are added to the program?
It's certainly possible, but Volvo said it's too soon to know.
What's the verdict?
Ultimately, it will depend on the value you place on services like the 24/7 roadside assistance and covered maintenance, plus not having to worry about things like getting insurance and having that as an extra bill to pay. Volvo CEO Hakan Samuelsson also points out that the subscription program could prove lucrative to customers in urban markets who face high insurance premiums.