Volvo took a bold stance on not only its own sales model, but the entire automotive industry, when it decided to go fully electric, and spun off its performance division, Polestar, as its own electrified brand. Now, the automaker believes that the future may not be car ownership at all. It could be a subscription service.
With the recent addition of the XC40, Volvo carefully crafted the announcement of its subscription-based service for vehicles, dubbed Care by Volvo. The automaker said it wants to make it as hassle-free as possible to get drivers out of their current cars and into one of its own. There’s no haggling down the price, worrying about maintenance schedules or paying an insurance company. It’s just a driver and a car.
By paying a flat monthly fee, Volvo will take care of every automotive expense on the driver’s behalf, including insurance, financing, maintenance, and detailing. It plans to offer its vehicles to consumers at the same price, regardless of his or her age or location.
Though on the surface this may appear to be similar to a vehicle lease, Volvo makes it clear that the program is instead a “premium subscription service,” allowing consumers to enjoy their vehicles while the manufacturer takes care of everything else. Volvo will also permit its customers to switch vehicles on a temporary basis should their needs require it. Leasing will still be made available to consumers who prefer it, and is speculated to come at a lower overall cost to the consumer, given that there are no additional services included.
Volvo appears to believe that the service will eventually be a core part of its business model, expecting it to account for nearly a fifth of all volume in as little as five years. CEO Håkan Samuelsson has said the plan will result in a short-term loss for Volvo, according to Autocar. Volvo seems to not be that worried about being in the red either. A spokesperson we reached out to mentioned that, thanks to the flat rate across Europe, “margins will naturally vary between individual markets”.
“We’ve priced this attractively for the market and then we will work on costs so to make it profitable,” Samuelsson told Autocar.
Treating the car like an appliance might be very appealing to the average driver. Simply get in and go without worry. Taking steps to future-proof itself in a society where consumers enjoy convenience and flexibility, Volvo hopes to corner the market of subscription-based car services before other companies step in and pave the road.