Two weeks after the California Department of Motor Vehicles agreed to investigate the Care by Volvo subscription, Volvo is making changes to the program. According to Automotive News, the changes include a shorter time for Volvo dealers to qualify to be a part of the program and to approve and get subscribers into cars. Dealers will be able to carry subscription-eligible vehicles on their lots and receive a commission on subscription sales just like they do on traditional vehicle sales and leases. Previously, customers had to order their cars.
We have built in all the components that would enable the dealer…to spot-deliver a vehicle as a Care by Volvo vehicle, said Peter Wexler, head of Care by Volvo in the U.S. We want to offer our retailers what we call the third option.
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The company has also tweaked its insurance program. It is now a group policy, making it a quicker and simpler process for subscribers to get car insurance. Changes to the program will be effective at 11 Volvo dealerships in New Jersey on October 1 with a rollout nationwide by the end of the year.
Changes to Care by Volvo appear to be a reaction to a January complaint by the California New Car Dealers Association (CNDCA) where they alleged Volvo was bypassing dealers and violating the franchise model, failing to give dealers notice of the program, Volvo preferentially allocating vehicles to the subscription program and payment packing (package pricing which fails to itemize the cost of the vehicle and the add-on services). On August 15, the New Motor Vehicle Board voted unanimously to investigate the Care by Volvo subscription program to determine if it violates the state vehicle code.
Our dealer members support innovation, including subscription-based models, but we are against violating the law. There is a right way and a wrong way to do business in California, Care by Volvo is the wrong way. We look forward to the results of DMVs thorough investigation into our claims and are hopeful that this illegal behavior will be stopped and punished, said Brian Maas, president of CNDCA, which includes nearly two dozen Volvo dealers.
Volvo Care USA CEO Anders Gustafsson told Automotive News that the company welcomes the investigation.
Someone is making a mountain out of a molehill, Gustafsson said. If we have done something wrong, we will change it.
He also said that launching the subscription has been a learning experience, and they are working with dealers to design a program that everyone is happy with. As one of the companys top three priorities, Gustafsson said the subscription company will evolve over time.
The Care by Volvo subscription program is an all-inclusive subscription program that provides subscribers with one flat monthly rate and no price haggling. It includes insurance, maintenance, roadside assistance, 15,000-mile driving allowance per year, the ability to upgrade after 12 months, and delivery within two to four weeks*.
New subscribers can sign up online or through their iOS or Android apps. Pricing starts at $700 per month for the 2020 XC40 SUV or 2019 S60 sedan hybrid. (Editors note: The delivery feature is likely to change once the program updates are live, and dealers can carry subscription-eligible vehicles on their lots.)
We are pleased to see that Volvo is willing to accept criticism from their dealers to modify the Care by Volvo subscription program, so that everyone gets what they want. It is unfortunate, however, that Volvo didnt announce any changes until two weeks after the California DMV agreed to investigate the program. The CNDCA filed its original complaint in January, so the company has had plenty of time to make changes.
While vehicle codes will vary from state to state, it seems likely that dealers in other states may have had similar complaints. Perhaps Volvo should have started making changes to the subscription program sooner or, if they were making changes in reaction to the original complaint, being transparent and saying, We hear you. Were working on it.