Becoming The Netflix Of Cars

Bloomberg Businessweek|December 17, 2018

Becoming The Netflix Of Cars

Volvo says selling vehicles via “subscriptions” will help it build stronger ties to customers.

Stefan Nicola

Car ads are nothing if not predictable, trumpeting the latest models’ design and comfort and urging customers to hit the showrooms. But in Germany, Volvo’s new campaign says “Don’t Buy This Car.”

Although the tagline sounds like it was drawn from the “never do this” lecture in Marketing 101, it fits with Volvo’s strategy of steering drivers toward “subscriptions” akin to streaming services such as Netflix or Spotify. Customers pay a single monthly bill that covers various fees and repairs—a plan that Volvo expects to account for half its output by 2025. “It’s very transparent, a hassle-free way of having a car,” says Volvo Chief Executive Officer Hakan Samuelsson. “You know exactly what it costs.”

After limited trial runs in the U.S. and Europe over the past year, Volvo in October introduced a nationwide program in Germany, with subscriptions to virtually all of its models. The monthly cost ranges from €498 ($561), for a basic version of its XC40 compact sport-utility vehicle up to €929 for a top-line XC90 SUV with alloy wheels and Nappa leather upholstery. Volvo says a subscription differs from a traditional lease in that there’s no down payment or end-of-lease fee, and the price includes insurance, taxes, roadside assistance, and services such as pickup from your home and mounting and storing your winter tires.

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December 17, 2018