Volvo bails on vehicle subscriptions in favor of leasing

Volvo ended its Care by Volvo subscription program in August, Automotive News (subscription required) has learned.

The program was introduced in the U.S. in 2017 and covered not only the vehicle but also maintenance and insurance in the one monthly price.

Volvo now plans to return its focus to traditional sales and leasing models.

A spokesperson for the automaker told Automotive News that existing customers of the subscription program can remain in the program until the end of their contracted term, after which Volvo will offer them a $1,000 credit toward a new Volvo purchase or $500 toward a lease.

Volvo hasn’t said what portion of customers opted for the subscription program but a New Jersey dealer with two stores told Automotive News that around 10% of customers used the program.

The program turned profitable in the U.S. by 2020 and also helped bring new customers to the brand, especially in the younger demographic, according to Volvo.

However, the program also blurred the lines with dealer franchise laws, as it was similar to a lease in many ways. As a result, Volvo in 2019 made the program more flexible to differentiate it with leases, by allowing customers to swap vehicles or terminate the subscription without penalty after five months.

Several other automakers offered subscription programs, albeit as a trial only. Only Volvo made it available on a permanent basis.