California Dealers File Petition against Volvo's All-Inclusive Car Subscription Service

[Megalith]

Last year, Volvo introduced a car subscription service called “Care by Volvo” that lets customers get a car for a flat monthly fee (e.g., the XC40, a $35,000 car, can be had for $600 a month), with insurance and maintenance included. The option has gotten so popular it has drew the attention of franchised car dealers, who have filed a petition to have it blocked. Apparently, it’s a threat to the traditional business model.

In its petition, the CNCDA calls Care by Volvo a "clever, but illegal, marketing ploy." The group claims Care by Volvo subscriptions are really just leases, claiming Volvo even uses the term "lease" to describe Care by Volvo in both internal documents and information provided to customers. Because Care by Volvo is allegedly similar to a lease, the CNCDA argues that it "usurps the traditional sales role of Volvo dealer franchisees." The group argues that Care by Volvo violates California laws against automakers selling cars in competition with franchised dealers, as well as the franchise agreements Volvo has with its dealers.

 

[Brian_B]

Gotta admit when I was car shopping this looked like a decent deal.

I ended up not getting a car at all at that time but would consider this if I start looking again.

 

[RogueTadhg]

"A threat to the traditional business model."
$600 with insurance and maintenance. Just the insurance alone would be good for most people. But also include maintenance? Bugger. I wonder what the fine print is like?

 

[matt_to_the_max]

I don't see how their system is illegal. If someone wants to lease a car this way then let them right? I personally will never lease a car but I can see how some would like Volvo's subscriptions (or leases.).

 

[MMitch]

Others need to adapt or find something else... if something is good enough to take traction, embrace it or you might close. We have an insurance company over here that do something similar now, they have their own garages and will do the work themselves on the car which keep their cost down and in the end allow them to offer lower prices.

I don't see how their system is illegal. If someone wants to lease a car this way then let them right? I personally will never lease a car but I can see how some would like Volvo's subscriptions (or leases.).

I leased because I had a better financing rate, will buy it after the 5 years [Already putting the money every months aside to pay it cash]. Went from 4.99% to 0.99%. Stupid if you ask me but you have to be vigilant with the numbers

 

[HeadRusch]

Um, you guys need to stop for a second and put down your flags of justice........Volvo at some point in the past made financial arrangements with dealerships to sell them cars FOR THE PURPOSES OF RESALE AND SUPPORT. Now, Volvo appears to be fucking those same dealers out of a lot of potential sales by allowing customers to end-run a lease around the dealership and any local or nationally-affiliated banks. Now, on the surface this is good for the consumer. But its very poorly implemented and if I were a volvo dealer I'd be pissed too.

You want your dealers to support and service your cars? Why do you then take business away from them. Better to force the dealers, as a term of their franchise or what have you, to offer these leases at the dealerships...at least then you keep them in the loop and keep people going to the dealerships.

I'd agree that Volvo seems to want to thin out it's herd of dealers.......but this is, on the surface, a pretty shite way of going abouout it..

 

[Ocellaris]

Um, you guys need to stop for a second and put down your flags of justice........Volvo at some point in the past made financial arrangements with dealerships to sell them cars FOR THE PURPOSES OF RESALE AND SUPPORT. Now, Volvo appears to be fucking those same dealers out of a lot of potential sales by allowing customers to end-run a lease around the dealership and any local or nationally-affiliated banks. Now, on the surface this is good for the consumer. But its very poorly implemented and if I were a volvo dealer I'd be pissed too.

You want your dealers to support and service your cars? Why do you then take business away from them. Better to force the dealers, as a term of their franchise or what have you, to offer these leases at the dealerships...at least then you keep them in the loop and keep people going to the dealerships.

I'd agree that Volvo seems to want to thin out it's herd of dealers.......but this is, on the surface, a pretty shite way of going abouout it..

While I agree with this, ultimately dealers did this to themselves. Volvo wants to sell cars, dealers are predatory, Volvo provided an option for buyers to spend less time at the dealer. Of course dealers would be against this as it’s essentially fixed cost and they can’t upsell people to pay $1,200 for paint protection or buying a car the customer doesn’t want. It’s a win for the consumer but a huge loss for the dealers so they are upset.

I see big changes happening to the standard dealer model over the next 10 years. This legal challenge should help set a precedent for what manufacturers can and can’t get away with.

 

[Mchart]

Um, you guys need to stop for a second and put down your flags of justice........Volvo at some point in the past made financial arrangements with dealerships to sell them cars FOR THE PURPOSES OF RESALE AND SUPPORT. Now, Volvo appears to be fucking those same dealers out of a lot of potential sales by allowing customers to end-run a lease around the dealership and any local or nationally-affiliated banks. Now, on the surface this is good for the consumer. But its very poorly implemented and if I were a volvo dealer I'd be pissed too.

You want your dealers to support and service your cars? Why do you then take business away from them. Better to force the dealers, as a term of their franchise or what have you, to offer these leases at the dealerships...at least then you keep them in the loop and keep people going to the dealerships.

I'd agree that Volvo seems to want to thin out it's herd of dealers.......but this is, on the surface, a pretty shite way of going abouout it..

The Volvo dealers did this to themselves by generally sucking for the US market.

 

[sfsuphysics]

You want your dealers to support and service your cars?

No, quite honestly I dont want my dealer to service my car. They take forever to do the most minor of things, when you make an appointment for service its not like you get your car worked on like you know... you had an appointment. They are less likely to use third party parts because.. Volvo parts cost more. So yeah, dealers are not the places where I want my car worked on unless it is under warranty, and even then isnt like they arent reimbursed by the cat company

 

[Brian_B]

There are some states that have laws that say specifically that automobiles must be sold through dealerships.

Tesla has been caught up in the same issues trying to do direct online sales.

 

[sfsuphysics]

So 600 a month for a 35k car and it includes maintenance and insurance? Uh yes please!

 

[sfsuphysics]

Tesla has been caught up in the same issues trying to do direct online sales.

Exactly what I was thinking, and I think its fucking retarded

 

[RobCalleg]

I’m shocked Californians are against capitalism.

 

[travisty]

One way or another dealers will die in the coming decade. Doubtful it's from direct sales like Tesla - which is so much better. It will be the move to pay-per-ride and the drastic reduction in personal vehicle ownership.

 

[benedict]

Others need to adapt or find something else

Why adapt when it's much easier and cheaper to buy a few politicians and outlaw the alternative?

 

[MMitch]

Why adapt when it's much easier and cheaper to buy a few politicians and outlaw the alternative?

I like to live in fairy worlds at least I can hope.. but yeah, bribe this bribe that..

 

[sfsuphysics]

I’m shocked businesses are against completion .

Fixed it for you.

 

[DukenukemX]

Um, you guys need to stop for a second and put down your flags of justice........Volvo at some point in the past made financial arrangements with dealerships to sell them cars FOR THE PURPOSES OF RESALE AND SUPPORT. Now, Volvo appears to be fucking those same dealers out of a lot of potential sales by allowing customers to end-run a lease around the dealership and any local or nationally-affiliated banks.

I like the sounds of this.

You want your dealers to support and service your cars?

Ain't my car now is it?

Why do you then take business away from them. Better to force the dealers, as a term of their franchise or what have you, to offer these leases at the dealerships...at least then you keep them in the loop and keep people going to the dealerships.

I take away all the business from the dealers by fixing my own cars. Screw those people.

I'd agree that Volvo seems to want to thin out it's herd of dealers.......but this is, on the surface, a pretty shite way of going abouout it..

The way I see it is that a lot of new cars are going to substantially lose their value and be sold for a more realistic price that people can afford. Those who lease will now "rent" their cars and those who buy will now get better deals. Everyone wins but the stealerships. Which means everyone wins.

 

[Hakaba]

Bought my last car from Volvo directly, had to wait for 6 something months but got nearly everything I wanted and really enjoyed the experience/cutting out all the dealership crap.

May jump on this deal depending on how everything is written out, but that may be in... 4-6 years so who knows what will be out by then.

 

[tunatime]

$600 a month is not bad at all down here just the insurance is would be $200+

 

[sadsteve]

You want your dealers to support and service your cars?

Not any more. The only time I take my car to the dealer these days is when there's a recall. I take my cars to a local mechanic that does a good job and is way cheaper than what the dealerships here charges. I handle my own general maintenance (oil changes, brake jobs, etc).

I use to take my cars to the dealership because the prices were reasonable, got a free car wash with each service and the sales people weren't at all pushy. The owner passed away and the dealership was sold. There was an immediate doubling of service charges (at least for the ones I had them performed on my car) and the sales people became very predatory. Haven't been back and I won't buy my next car from them.

 

[KazeoHin]

The business model for cars in the western world is terrible. Good on Volvo.

 

[kandrey89]

FK CAR DEALERS.

 

[piscian18]

Those poor dealerships. Like autonation, who literally lost my fucking car for 3 days.

 

[Brian_B]

I’m shocked businesses are against completion .

Fixed it for you.

I'm also against completion. Procrastinators unite!

 

[Merc1138]

The people in this thread actually trying to defend car dealerships, LOL.

Seriously, the automobile industry is the only one where you can make one of the 2nd most expensive purchases the average person will ever sign for, and still end up leaving with their new car pissed off for one reason or another. When you can get better service buying a damn toaster than a $30,000+ car something is wrong. Being hassled over warranty and protection nonsense isn't something people find acceptable buying a console at a gamestop, why the hell do we accept it as normal when buying a new car?

And no, I won't be bothering with the dealership I bought my car at now that the warranty is up because even a simple service(change oil, check fluids, etc.) with an appointment somehow manages to take half the day and that's not even including the crappy experience buying the thing where after I had finally gotten to a firm price with the sales guy I had to warn him that if the F&I guy asked me even one time about selling anything extra I'd walk right out of his office before signing(already had my own financing at 1%) and it still took 4 freakin' hours of BS'ng back and forth when I showed up the 2nd day with the check in my pocket so clearly they don't value my time(and they knew I had the check so it's not like spending any extra time with me was going anywhere).

 

[Lakados]

The dealership model needs to die.... But they spend so much money on lobbying that it wont. When the model for dealerships was created auto service options were few and far between, honestly give me a reasonably close location that can service the car, let me to go a website pick out my options and have somebody deliver it to my door.

Nearest place I would trust to work on my Toyota is a 2H drive away and I am OK with that, they loan me a car I get a Costco/Walmart run in hit up a book store maybe play a game or 2 of 40K up at the FLGS and pick it up when they are done. Makes for a good Saturday, probably gonna buy another Toyota to not break the pattern.

 

[nutzo]

So 600 a month for a 35k car and it includes maintenance and insurance? Uh yes please!

IMHO, Not so good.

I bought a $30k car 6 years ago, 0% financing deal. Financed the entire amount, even the taxes, so 0 down and $497/month for 5 years.

5 years later it was paid off, plus I still own the car.
Only maintenance was the yearly oil change, and eventually tires.
Insurance is about $600 a year.

Your cost for 6 years, $43,200
My cost for 6 years, $33,620

Since I plan on keeping my car at least 10 years, each additional year will be much less expensive since I don't have any payments.
My monthly costs going forward (insurance and maintenance) are less than $100.

 

[Disco_Stu_04]

What happens once the car gets "too old" ... off to the used car subscription lot?

 

[Brian_B]

IMHO, Not so good.

I bought a $30k car 6 years ago, 0% financing deal. Financed the entire amount, even the taxes, so 0 down and $497/month for 5 years.

5 years later it was paid off, plus I still own the car.
Only maintenance was the yearly oil change, and eventually tires.
Insurance is about $600 a year.

Your cost for 6 years, $43,200
My cost for 6 years, $33,620

Since I plan on keeping my car at least 10 years, each additional year will be much less expensive since I don't have any payments.
My monthly costs going forward (insurance and maintenance) are less than $100.

This is not a program for people who plan on keeping their vehicle for 10 years.

Also, don't forget each additional year you keep that car, the maintenance costs only go up. If your lucky it's just oil changes and tires... but 10 years, yeah, it will be more than that, even if your just doing Recommended maintenance and nothing breaks.

Will that make your car suddenly more expensive than this Volvo? No. But it's still going to add up.

 

[Merc1138]

IMHO, Not so good.

I bought a $30k car 6 years ago, 0% financing deal. Financed the entire amount, even the taxes, so 0 down and $497/month for 5 years.

5 years later it was paid off, plus I still own the car.
Only maintenance was the yearly oil change, and eventually tires.
Insurance is about $600 a year.

Your cost for 6 years, $43,200
My cost for 6 years, $33,620

Since I plan on keeping my car at least 10 years, each additional year will be much less expensive since I don't have any payments.
My monthly costs going forward (insurance and maintenance) are less than $100.

1 accident(rear ended at a stoplight) that didn't result in a rate change, 0 tickets, been driving for years. I'm not sure how I could get my insurance down to $50/mo(your $600/year) while maintaining full coverage. I mean, I could do it if I only had collision I guess.

Also, while you're not wrong about keeping the car for 10 years, the assumption that your maintenance will only be $50/mo(because the insurance is apparently the other $50) is quite the positive outlook. That said, obviously owning a car for longer than it takes to pay it off is a good thing, but at the same time you've got an older car, while someone else would potentially have a newer one including any new safety or other features(this is a matter of personal perspective). I plan on owning my car for longer than it takes to pay it off(although I've seen loans extending as far as 8 years now... that I find really odd), but I'm aware that even the listed maintenance intervals for things like transmission fluid, coolant, brakes, etc. are going to cost me a hell of a lot more than $50/mo. once it hits 6, 7, 8+ years old.

I'm also really curious what your $50/mo. insurance actually includes.

 

[GlowingGhoul]

Last year, Volvo introduced a car subscription service called “Care by Volvo” that lets customers get a car for a flat monthly fee (e.g., the XC40, a $35,000 car, can be had for $600 a month), with insurance and maintenance included. The option has gotten so popular it has drew the attention of franchised car dealers, who have filed a petition to have it blocked. Apparently, it’s a threat to the traditional business model.

In its petition, the CNCDA calls Care by Volvo a "clever, but illegal, marketing ploy." The group claims Care by Volvo subscriptions are really just leases, claiming Volvo even uses the term "lease" to describe Care by Volvo in both internal documents and information provided to customers. Because Care by Volvo is allegedly similar to a lease, the CNCDA argues that it "usurps the traditional sales role of Volvo dealer franchisees." The group argues that Care by Volvo violates California laws against automakers selling cars in competition with franchised dealers, as well as the franchise agreements Volvo has with its dealers.

There is a spin on this that bears pointing out. In no way does the lawsuit allege this is a "threat to the traditional business model". That's Megalith's spin on it, implying the dealers are simply refusing to accept "progress".

They argue it's against California Law, it's a violation of the written contract between the dealership and the manufacturer, and least, is that it "usurps" the implied contractual relationship between a dealer and a manufacturer. If true, whether or not one likes the dealership system (I don't) they have a valid point.

 

[DukenukemX]

Not any more. The only time I take my car to the dealer these days is when there's a recall. I take my cars to a local mechanic that does a good job and is way cheaper than what the dealerships here charges. I handle my own general maintenance (oil changes, brake jobs, etc).

I use to take my cars to the dealership because the prices were reasonable, got a free car wash with each service and the sales people weren't at all pushy. The owner passed away and the dealership was sold. There was an immediate doubling of service charges (at least for the ones I had them performed on my car) and the sales people became very predatory. Haven't been back and I won't buy my next car from them.

I recently took my 07 Lexus IS250 to the stealership for an airbag light and they wanted something like $700 to replace the wire harness. I did a quick Google and found that the lower drivers side airbag connector tends to corrode a little and a bit of dielectric grease fixed my problem. So essentially I fixed it for free and saved myself $700. This is a Lexus dealership pulling this shit.

I also took my Corvette many years ago to change the dash lights and got the car back without the windshield projector working and the dealer wanted to charge me thousands of dollars to fix it. Fuck them I took off the dash and found the assholes forgot to connect the plug. Not only I fixed it but I replaced the stupid bulbs with LEDS so this doesn't happen again.

Nope, never again. Bunch of idiots who can barely change the oil and brakes on cars.

 

[nutzo]

1 accident(rear ended at a stoplight) that didn't result in a rate change, 0 tickets, been driving for years. I'm not sure how I could get my insurance down to $50/mo(your $600/year) while maintaining full coverage. I mean, I could do it if I only had collision I guess.

Also, while you're not wrong about keeping the car for 10 years, the assumption that your maintenance will only be $50/mo(because the insurance is apparently the other $50) is quite the positive outlook. That said, obviously owning a car for longer than it takes to pay it off is a good thing, but at the same time you've got an older car, while someone else would potentially have a newer one including any new safety or other features(this is a matter of personal perspective). I plan on owning my car for longer than it takes to pay it off(although I've seen loans extending as far as 8 years now... that I find really odd), but I'm aware that even the listed maintenance intervals for things like transmission fluid, coolant, brakes, etc. are going to cost me a hell of a lot more than $50/mo. once it hits 6, 7, 8+ years old.

I'm also really curious what your $50/mo. insurance actually includes.

Full $300k insurance coverage.
I'm over 50, married, clean record, and I have a short commute, putting less than 6,000 miles a year on the car. Plus it's a Camry Hybrid which is a cheap car to insure.
Results in a reasonable cost for full insurance. I also get a better price since I pay for the full year in advance, and have my home insured with the same company.
Wife drives a 10 year old Toyota Mini Van that's even cheaper to insure since she drives even less miles.

The type of car you drive can make a big difference in the cost of insurance.
When I'm looking at new cars, I always check what it would cost to insure.
Back when I bought the Ford Explore, I was also looking at the Toyota 4Runner. The insurance would have been double what I paid for the Explorer.

As for maintenance, with the low miles driven, it hasn't been a problem with any of the Toyota's I've owned.
I had my last car, 4 cyl Camry, for 11 years. It was never in the shop except for oil changes and tires.
I did change the brakes myself at 70K, and the transmission fluid and main belt around the same time.
Only repairs where a relay for the air conditioner, a motor mount and a few light bulbs, all taken care of myself.
Total cost over the last 5 years (not including oil and tires) would have been around $300, or about $5/month.

Wife's van is now 11 years old, and I did have to spend almost $300 on the brakes last year, as I didn't have time to take care of it myself.
Other than that, we've had no problems other than a couple rear bulbs I had to replace over the years.

Maybe I've just been lucky, but compared to the Ford Explorer I had years ago, the Toyota's have been 1,000 times better.

 

[Jagger100]

I don't see how their system is illegal. If someone wants to lease a car this way then let them right? I personally will never lease a car but I can see how some would like Volvo's subscriptions (or leases.).

dealers make it illegal retroactively.

State dealer association have immense power which is far greater than the auto companies. They regularly get the state to retroactively change their contracts to their favor.

 

[Dead Parrot]

Followed a couple of the links. Didn't see where it said who would do any needed service. If the subscription service uses something other then the dealer service network, what does that say about Volvo's opinion of their own dealer network?

Can also see where this would be a wonderful deal for businesses that can deduct expenses and want to avoid dealing with the depreciation sections of the tax code.

 

[[Spectre]]

Full $300k insurance coverage.
I'm over 50, married, clean record, and I have a short commute, putting less than 6,000 miles a year on the car. Plus it's a Camry Hybrid which is a cheap car to insure.
Results in a reasonable cost for full insurance. I also get a better price since I pay for the full year in advance, and have my home insured with the same company.
Wife drives a 10 year old Toyota Mini Van that's even cheaper to insure since she drives even less miles.

The type of car you drive can make a big difference in the cost of insurance.
When I'm looking at new cars, I always check what it would cost to insure.
Back when I bought the Ford Explore, I was also looking at the Toyota 4Runner. The insurance would have been double what I paid for the Explorer.

As for maintenance, with the low miles driven, it hasn't been a problem with any of the Toyota's I've owned.
I had my last car, 4 cyl Camry, for 11 years. It was never in the shop except for oil changes and tires.
I did change the brakes myself at 70K, and the transmission fluid and main belt around the same time.
Only repairs where a relay for the air conditioner, a motor mount and a few light bulbs, all taken care of myself.
Total cost over the last 5 years (not including oil and tires) would have been around $300, or about $5/month.

Wife's van is now 11 years old, and I did have to spend almost $300 on the brakes last year, as I didn't have time to take care of it myself.
Other than that, we've had no problems other than a couple rear bulbs I had to replace over the years.

Maybe I've just been lucky, but compared to the Ford Explorer I had years ago, the Toyota's have been 1,000 times better.

Your maintenance costs are still way low of reality. Brakes, belts, fluids, bulbs, shocks, bushings, etc are all wear items and come due to be replaced. Wait for the upswing on maintenance when that all starts to come due.

 

[greenman]

XC40 Disclaimer:
Care by Volvo subscription monthly lease payment of $700 for 24 months, based on $41,945 MSRP of 2019 XC40 T5 AWD Momentum with first monthly payment of $700 due at signing, and $800 for 24 months, based on $45,740 MSRP of 2019 XC40 T5 AWD R-Design with first monthly payment of $800 due at signing. For all Care by Volvo offers, lessee is responsible for excess wear above $1,000 waiver and mileage over 15,000 miles/year at $0.25 / mile. Excludes taxes, title and registration fees and is available for qualified customers through Volvo Car Financial Services. Care by Volvo is available at participating dealers. Offer valid for orders placed by February 28, 2019.

S60 Disclaimer:
Care by Volvo subscription monthly lease payment of $750 for 24 months, based on $46,445 MSRP of 2019 S60 T6 AWD Momentum with first monthly payment of $750 due at signing, and $850 for 24 months, based on $48,195 MSRP of 2019 S60 T6 AWD R-Design with first monthly payment of $850 due at signing. For all Care by Volvo offers, lessee is responsible for excess wear above $1,000 waiver and mileage over 15,000 miles/year at $0.25 / mile. Excludes taxes, title and registration fees and is available for qualified customers through Volvo Car Financial Services. Care by Volvo is available at participating dealers. Offer valid for orders placed by February 28, 2019.
​

Not sure where OP got $600 a month from. Still probably not any more than a dealer would charge tho.

 

[Merc1138]

Full $300k insurance coverage.
I'm over 50, married, clean record, and I have a short commute, putting less than 6,000 miles a year on the car. Plus it's a Camry Hybrid which is a cheap car to insure.
Results in a reasonable cost for full insurance. I also get a better price since I pay for the full year in advance, and have my home insured with the same company.
Wife drives a 10 year old Toyota Mini Van that's even cheaper to insure since she drives even less miles.

The type of car you drive can make a big difference in the cost of insurance.
When I'm looking at new cars, I always check what it would cost to insure.
Back when I bought the Ford Explore, I was also looking at the Toyota 4Runner. The insurance would have been double what I paid for the Explorer.

As for maintenance, with the low miles driven, it hasn't been a problem with any of the Toyota's I've owned.
I had my last car, 4 cyl Camry, for 11 years. It was never in the shop except for oil changes and tires.
I did change the brakes myself at 70K, and the transmission fluid and main belt around the same time.
Only repairs where a relay for the air conditioner, a motor mount and a few light bulbs, all taken care of myself.
Total cost over the last 5 years (not including oil and tires) would have been around $300, or about $5/month.

Wife's van is now 11 years old, and I did have to spend almost $300 on the brakes last year, as I didn't have time to take care of it myself.
Other than that, we've had no problems other than a couple rear bulbs I had to replace over the years.

Maybe I've just been lucky, but compared to the Ford Explorer I had years ago, the Toyota's have been 1,000 times better.

Fair enough, but damn that's still cheap. My compact Ford SUV for similar coverage here in CA is probably $120/mo, less than 12k miles a year, paid for 6 months at a time, etc.

Regarding the maintenance, you're still WAY underestimating it. Heck, even the Camry you mention, never in the shop... except you've got the time and tools to have done everything yourself? I'm not talking about bulbs and other minor stuff like a simple relay, but you cannot ignore the maintenance on your camry as costing nothing simply because you had the time and tools to deal with that. Most people don't, and time = money.

Belts, fluid changes, motor mounts, brakes(beyond pads), and you didn't mention suspension(which does raise an eyebrow) are not something people are going to be able to do for $50/mo. if they need to pay someone to do it. Hell, a set of tires for a sedan you're looking at $100 a pop plus mounting, your budget barely covers that. And it's not like you drive a Toyota I drive a Ford therefore your costs are cheaper, we're talking about wear items that NEED to be replaced on any vehicle.

 

[USMCGrunt]

Your maintenance costs are still way low of reality. Brakes, belts, fluids, bulbs, shocks, bushings, etc are all wear items and come due to be replaced. Wait for the upswing on maintenance when that all starts to come due.

but! but! My anecdotal evidence is wholly representative of the US population!