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New Vehicle Subscription Services Flip The Usual Leasing Script

New Vehicle Subscription Services Flip The Usual Leasing Script

December 24, 2017

Until this point in time, there have been two basic ways to own a vehicle. You could buy it or you could lease it. Now there is a third way – with vehicle subscription services. An increasing group of carmakers are introducing a new way to drive the vehicle (or vehicles) of your choice.

Where Is The Automotive World Headed?

This is the big unknown for the world’s vehicle manufacturers. They are scared, because the world of mobility is changing. They see the rise in ride-sharing services like Uber, Lyft, Car2Go, and ZipCar. Self-driving cars are on the way. Increasing numbers of millennials are doing just fine without owning a personal vehicle. Buying a vehicle, or even leasing one, is too much of a financial burden. Add the insurance, maintenance, and repairs, and it’s even worse.

Have It Your Way With Vehicle Subscription Services

But with vehicle subscription services, you have more flexibility. Depending on the plan, you can switch vehicles within a brand’s lineup as often as you want. The vehicle of your choice is delivered to you in perfect condition, and picked up when you are done with it. You can go month-to-month, without a long-term contract.

One Monthly Fee Covers Everything

With a vehicle purchase or lease, your monthly payment covers only the vehicle. With vehicle subscription services, your monthly payment covers the vehicle, the vehicle tax and registration, the insurance, and the maintenance and repairs. All you have to do is drive it and fuel it.

Keep in mind that this is still the early days. Most of these subscription programs are in their experimental trial phases, and are being rolled out slowly in limited test markets. They will be fine-tuned as each brand builds up some real-world experience. Some will survive, and others will be quietly eliminated. Let’s take a look at some of the vehicle subscription services that are currently available:

Porsche Passport

This is the most flexible and the most expensive of the vehicle subscription services so far. Currently available only in Metro Atlanta, Porsche Passport provides you with on-demand access to two tiers of the Porsche lineup, under two different plans:

  • Launch Plan: $2,000 monthly fee, includes 718 Boxster, 718 Cayman S, Macan S, and Cayenne
  • Accelerate Plan: $3,000 monthly fee, includes Porsche 911 Carrera S, Panamera 4S, Macan GTS, and Cayenne S E-Hybrid SUV, plus all vehicles in the Launch Plan

The Porsche Passport phone app is used to apply for membership and arrange for vehicle “flips,” as Porsche calls them. There is a $500 one-time activation fee. You can make unlimited flips as often as you’d like, and there is no mileage limitation. Each vehicle is delivered to you after being fully detailed. A million dollars worth of liability insurance is included, with a $1,000 deductible. There is a minimum 31-day commitment.

BOOK By Cadillac

This is generally similar to Porsche’s program, but with a few limitations. BOOK by Cadillac is currently operating in the New York Metro area, Los Angeles, Dallas, and Munich, Germany. It offers a single plan, which involves a flat monthly fee of $1,800 per month. Vehicles include 2017 and 2018 model year Cadillac vehicles in the upper-level Platinum and Premium Luxury Level trims. Available models include the XT5, CT6, CT6 Plug-In, Escalade, ATS-V, and CTS-V.

BOOK by Cadillac has its own phone app. Members use it to browse and select the vehicles that will be delivered to them by a white-glove concierge service. There is a $500 one-time initiation fee. You can swap vehicles up to 18 times per year. You are allowed up to 2,000 miles per month.

In addition to insurance, registration, taxes, maintenance and repair costs being included, you also get OnStar, SiriusXM, and 4G LTE in every vehicle. Subscription is month-to-month, and members are free to cancel at any time.

Care By Volvo 2019 XC40 Subscription

In contrast to the Porsche and Cadillac programs, the Care by Volvo subscription on their soon-to-arrive 2019 Volvo XC40 compact SUV is available nationwide. It is also tied to a single vehicle. There are two tiers of pricing, based on the XC40 trim level you select:

  • XC40 Momentum luxury trim, with premium packages: $600 monthly fee
  • XC40 R-Design sport trim, with premium packages: $700 monthly fee

Care by Volvo is a hybrid of a lease and a subscription service. Like a lease, it has a 24-month term – but like a subscription, you can swap to a new vehicle after 12 months.

Ordering your vehicle is done online through the Volvo website. You take delivery through a dealer. The subscription requires no deposit, and the flat monthly fee includes insurance, maintenance, concierge services, and roadside assistance. Pricing is standardized for all customers, and is not negotiable. You also have the option to switch to a different vehicle temporarily if your needs change.

Hyundai Ioniq Electric Car Subscription

Hyundai offers this subscription plan in California, for its recently introduced Hyundai Ioniq battery electric car. This plan is more like an all-inclusive lease. It covers a 36-month term for a payment of around $300 per month, with a $2,500 down payment (which can be offset by the state’s EV tax rebate, and also includes the first monthly payment).

Maintenance and service are included, and you will be reimbursed for your first 50,000 miles of charging costs. Even better, you get unlimited mileage! Hyundai may expand this plan to other vehicles, especially its new Genesis luxury brand.

Lincoln Subscription Service – Coming In 2018

Lincoln will roll out its version of a month-to-month subscription service sometime in 2018. It will run a pilot program in a few California cities. Lincoln will allow its members to swap out their Lincoln vehicles on a monthly basis. Insurance, maintenance, roadside assistance, and vehicle pickup and delivery will all be included in the price, which has not yet been announced. Lincoln has promised that their service will be more affordable than Porsche’s and Cadillac’s, and will vary based on the actual vehicle being used.

How Will Vehicle Subscription Services Fare In The Marketplace?

With the exception of the Hyundai program, which is very similar to a lease, these subscription services are very expensive. They are much more costly than a conventional lease on a comparable vehicle, even when insurance and maintenance are accounted for. Even so, the high operating costs of these programs, with their white-glove deliveries, and the ongoing cost of detailing and maintaining their fleets, may generate losses for the manufacturers. Time will tell.

These vehicle subscription services will appeal primarily to that sliver of the population to whom convenience and variety trump value. They may also appeal to people who have a specific need for an upscale vehicle, for a limited period of time…a month-long, coast-to-coast round trip in a Porsche sounds like fun!