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Monday, February 5, 2018VOLUME 14 ISSUE 6
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BMW and Mercedes-Benz Join Other Carmakers in Offering Automotive Subscriptions

BMW and Mercedes-Benz appear to be joining the likes of Volvo, Porsche, Cadillac and Lincoln in offering automotive subscriptions that cover all of the fees required with car ownership or leasing under one payment. Mercedes-Benz and BMW last month said they are preparing to launch vehicle subscription pilots this year in the U.S. These automotive subscriptions offer customers a simplified payment structure and the flexibility to swap to a newer car sooner than a traditional lease or finance plan, or a higher-quality vehicle than a daily rental from the airport, says Automotive News.

Subscription plans generally offer customers a vehicle to drive for a monthly fee that includes registration, taxes, insurance and maintenance, as well as pickup and delivery. Customers typically can switch among available vehicles based on their needs.

BMW Group and Daimler, Mercedes’ parent company, already run car-sharing firms. Mercedes has subscription pilots in other countries, including a Smart-branded program in Italy and a Mercedes-branded program in Germany.

BMW most likely will test a subscription model this year in a U.S. market, BMW of North America CEO Bernhard Kuhnt said in an interview. "We are in the phase of looking at it and evaluating together with BMW Financial Services," Kuhnt said. "And if we are going to do it, we are going to pilot it first to learn more about it." BMW hasn't determined the details of its pilot, Kuhnt said. The company is in talks with organizations that have subscription experience to determine the best offer for consumers. Kuhnt said, "At the end of the day, the consumer is going to decide if that's something they want to do."

Daimler's Mercedes unit will offer a pilot in an as-yet-unidentified U.S. market this year to help it figure out the potential. "I do believe these platforms have their benefits," Daimler AG CEO Dieter Zetsche said of subscription plans and other nontraditional ownership experiments. It "remains to be seen if any one of them will have a really profitable business in the long run."

Porsche said that its Porsche Passport pilot in Atlanta, launched last October, is bringing new and younger customers to the brand at rates above its expectations. So far, 78 percent of members in Porsche Passport are not previous Porsche owners, Porsche Cars North America CEO Klaus Zellmer said.

Volvo Cars released the details of Care by Volvo, a 24-month subscription service, to journalists. The pricing, which includes insurance, maintenance and concierge services, comes in well below competitive offerings from Cadillac and Porsche. "This is a national program, not a pilot or a test," Anders Gustafsson, CEO of Volvo Cars of North America, told Automotive News. "Everyone wants to simplify, and we handle and balance this all on our own books." Volvo introduced the service at the XC40 launch in September. The automaker said 2,000 people already have raised their hands to use the service, and customers can sign up to subscribe to the XC40 which hits dealership lots in March. The XC40's luxury trim, equipped with premium packages, will be available at a $600 monthly fee, and the R-Design sport trim, with premium packages, will be available for $700 a month. Subscribers will have the option to swap out vehicles 12 months into the 24-month service term.

Cadillac introduced its Book by Cadillac service in January 2017, which now gives customers in New York, Los Angeles and Dallas access to its stable of vehicles for $1,800 a month. Book by Cadillac will give subscribers on-demand access to the latest Cadillac models. This enables members to have the flexibility to change cars as their needs changes, allowing them to get an SUV or crossover when they need utility or a high-performance vehicle for driving through scenic winding roads. Cars are delivered by a concierge to the location specified by the member and vehicles are also exchanged at that point should the member have another vehicle from the program. All vehicle maintenance work will also be performed by Cadillac. The monthly fee for Book by Cadillac is $1,500 per month, which includes registration, taxes, insurance and maintenance costs. Cadillac also notes the there’s no mileage limit and that there’s no long-term commitment required.

Porsche Passport, introduced in October, offers Porsche vehicles to the Atlanta market for $2,000 or $3,000 a month. Porsche Passport will give members flexible access to Porsche's sports cars and other vehicles via a mobile app. Vehicle deliveries under the program will begin in November as part of a pilot in Atlanta where Porsche Cars North America Inc. is headquartered. The month-to-month subscription will give members the option of frequent vehicle exchanges, unrestricted mileage and on-demand access for up to 22 Porsche models. Membership cost will range from $2,000 to $3,000 a month. Porsche is partnering on the offering with Clutch Technologies of Atlanta, which already markets a subscription vehicle service in parts of the country.

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