Volvo's Subscription Service Shift: Streamlining for the Future

Volvo has made a strategic decision to suspend its vehicle subscription program, Care by Volvo, in the United States and Europe. The move aims to allow the company to focus on its core customer offerings and the introduction of new products, while also increasing operational efficiencies. This shift in Volvo's business model comes after a six-month investigation by California's Department of Motor Vehicles, which found that the automaker had failed to properly notify dealers about related changes to the franchise agreement and provided preferential treatment in allocating subscription vehicles to certain stores.

Streamlining for Success: Volvo's Subscription Service Shift

Farewell to Care by Volvo

Volvo's Care by Volvo subscription service, which offered an alternative to traditional leasing, has come to an end. The program, which was first introduced in 2017, provided customers with more flexibility than a conventional lease, allowing them to swap cars or terminate the contract after just five months without penalty. The monthly fee included the car, insurance, roadside assistance, and other perks, making the ownership experience hassle-free.However, the program faced some challenges, with some dealers heavily criticizing it. This led to a six-month investigation by California's Department of Motor Vehicles, which found that Volvo had failed to properly notify dealers about related changes to the franchise agreement and provided preferential treatment in allocating subscription vehicles to certain stores.

Refocusing on Core Offerings and New Products

Volvo's decision to suspend the Care by Volvo program is part of a broader strategy to concentrate on the company's core customer offerings and the introduction of new products. According to a Volvo spokesperson, this move will allow for "concentrated focus on our core customer offers and the coming introduction of new products, [and an] increase in operational efficiencies."By streamlining its business model and focusing on its core offerings, Volvo aims to enhance its operational efficiency and better position itself for the future. This strategic shift comes at a time when the automotive industry is undergoing significant changes, with the rise of new technologies, changing consumer preferences, and increased competition.

Transitioning Existing Subscribers

For those customers who are currently enrolled in the Care by Volvo program, the company has provided a transition plan. Existing subscribers can finish their term and then become eligible for a $1,000 credit toward a new Volvo purchase or $500 toward a lease. This approach ensures a smooth transition for those who have already invested in the subscription service, while also incentivizing them to continue their relationship with the Volvo brand.The discontinuation of the Care by Volvo program marks a significant shift in Volvo's business strategy, as the company seeks to optimize its operations and focus on its core offerings. By streamlining its focus, Volvo aims to enhance its competitiveness and better position itself to meet the evolving needs of its customers in the years to come.

Attracting New Customers

Despite the discontinuation of the Care by Volvo program, the company's efforts to attract new customers have not gone unnoticed. According to data from previous years, the subscription service was successful in bringing in people who would not have otherwise considered a Volvo vehicle, with 80% of customers being new to the brand.This suggests that Volvo's subscription model was effective in reaching a broader audience and introducing the brand to a new demographic of potential customers. As the company shifts its focus, it will be crucial for Volvo to continue exploring innovative ways to engage with both existing and prospective customers, ensuring that its core offerings remain compelling and relevant in the ever-changing automotive landscape.

Dealer Partnerships and Certified Pre-Owned Vehicles

The Care by Volvo program also provided benefits for the company's dealer network. Dealers received a cut of the subscription revenue and were able to list lower-mileage, higher-margin certified pre-owned models for sale after the subscription terms ended. This arrangement allowed dealers to generate additional revenue streams and offer a wider range of options to their customers.As Volvo moves forward without the subscription service, it will be important for the company to maintain strong partnerships with its dealer network and continue to support their efforts to provide a seamless and satisfying customer experience. By leveraging the expertise and resources of its dealer partners, Volvo can ensure that its core offerings are effectively delivered to consumers, further strengthening its brand presence and market position.