Netflix now has more subscribers than cable, Spotify subjected CDs to the same fate as the 8-track tape, and Amazon Prime is making brick and mortar retail feel the pain. Subscription services are taking over and the automotive world is not immune. The traditional car shopping route offers three paths 1) buy new 2) buy used 3) lease. Now there's a 4th option - subscribe.
Car subscription services are being piloted by automakers and startup companies alike. They allow you to join an app-based program, pay a monthly fee, and drive vehicles which you can swap on demand. It may take some time before they become mainstream, but we have reason to believe car subscriptions can one day replace ownership.
Manufacturer Subscription Services
There are a number of automakers who have launched a subscription service already and for many others, one is in the works. A few OEMs like BMW, Mercedes-Benz, and Audi are piloting the service in select cities while Volvo's program can be found nationally. Here's a sampling of the services offered by OEMs.
Access by BMW
BMW offers three plans for its subscription service, Access by BMW. After paying a $575 joining fee, you'll be able to choose from plans priced at $1,099/month, $1,399/month and $2,699/month. The higher the rate, the more vehicles available for you to drive. So, what do you get for your money? A car delivered to your door by a personal concierge and swapped on demand. Roadside assistance, full detail washes, maintenance, and a $1 million liability insurance policy are all yours as well. Currently, the service is only offered in the Nashville area.
Mercedes' offering comes at a heftier monthly membership fee with one plan priced at $1,595/month and another at $2,995/month. The Mercedes-Benz Collection activation fee is $495 and gives you access to insurance, service and maintenance, roadside assistance, and a personal concierge to swap your cars. Mercedes-Benz Collection operates in Philadelphia and Nashville.
Audi Select simplifies the membership-based service with only one plan which will set you back $1,395/month and give you access to 5 vehicles to choose from. These include the Audi A4 sedan, A5 Cabriolet, Q5 SUV, S5 Coupe or the Q7 SUV. For the monthly fee, you get to swap vehicles twice per month with unlimited miles, insurance, maintenance, roadside, full car detailing and a concierge to drop off and pick up the cars. Currently, Audi Select is only available in the Dallas-Fort Worth area.
Care by Volvo
Volvo stands apart from the other OEMs in that their Care by Volvo service is available nationwide. It also toes the line between leasing and a true subscription since the same car must be kept for at least a year and the price is more reasonable, starting around $600/month. The subscription includes insurance, maintenance, and miles. Only the Volvo S60 and the XC40 are currently available for the program.
Car Subscription Startups
OEMs aren't the only ones in the car subscription game. There are also a number of third-party startups working to revolutionize how we drive, and they're doing it at more reasonable costs than the premium manufacturers. These are some of the major players:
This subscription service was founded as a startup but partnered with Ford Motor Company to offer only Ford and Lincoln vehicles to its subscribers. Canvas lets you choose your vehicle type, subscription length
Fair offers over 30 brands of pre-owned vehicles for a monthly subscription. They run a credit check to determine how much a subscriber can afford to pay per month and present a range of cars in that budget. While the monthly fee can be as low as $200/month, there is a catch. Every time you want to swap a car, you'll be paying a start fee which can be as high as $900. Insurance is also not included in this rate but can be added at an extra cost. Routine maintenance like oil changes and tire rotations are covered.
The Pros and Cons
Car subscription services are undeniably convenient and flexible, offering many benefits compared to leasing and buying. Firstly, they allow you to try out multiple vehicles at your leisure (we like the idea so far). Even traditional leases that offer more flexibility than buying, still lock you in for a minimum of two years. Another advantage over leasing and buying is that subscription services are worry-free. You won't need to shop for insurance and handle routine maintenance since most services get you off the hook for both.
Where subscription services fall short is in price competitiveness. To compare the costs of the OEM's subscription service to a traditional lease, we selected the BMW 330i sedan as our guinea pig. Access by BMW's "Icon" plan offers this model and will run you $1,099/month. This includes insurance and maintenance. On BMW's Car Payment Estimator, we selected leasing the BMW 330i for 36 months. Even with a $0 down payment, the rate is estimated at $581.36/month. Add in your insurance and maintenance costs and the monthly rate is still significantly more affordable with the lease.
The third-party startups' rates are more reasonable, but overage miles and car swap fees can quickly add up and end up costing more than your average lease. Since car subscription services come at a higher monthly rate, they aren't for everyone. We envision a subscription working well for a busy executive who has places to be, disposable income to spend and no time for pesky things like vehicle maintenance. For the average Joe, however, it will take a lower price point to be enticing. Another obvious drawback is that most services are only available in a few select cities. If you don't live in a city that's being served, you're out of luck for now.