Volvo wants to make it as easy to get into a sensible Swedish sedan as Apple has made it to buy an iPhone. Right now, you can apply online (or in-store), let Apple run a quick credit check, and walk out with an iPhone on an installment plan in a matter of minutes. It was a smart way for Apple to take back the hardware-buying process from cell providers, and, to most, an iPhone feels more attainable at $30-$40 per month, rather than one large lump sum. On the upgrade program, you sign a rolling two-year loan agreement, and can get a new phone each year.
Volvo is trying to bring essentially the same concept to the often-confusing world of car buying. Today the company unveiled “Care by Volvo,” a new subscription service for its cars. Customers pay a flat monthly fee, get a brand new vehicle, and can upgrade as early as 12 months into the plan. Volvo hasn’t said how much the service will cost, but it’s launching it alongside the new XC40 SUV, which will start at $33,200. (Volvo said in a release that more information, and subscriptions, will be available after the Los Angeles Auto Show in December.)
The idea is similar to traditional leasing models, where a customer puts up a down payment—around $2,500 on a new XC60 (a larger Volvo SUV)—and pays a monthly fee, and returns the car after a few years, but potentially more affordable.Volvo’s new model would get rid of certain extra fees, including down payments. “Care by Volvo customers will be able to drive away in a new Volvo without having to worry about the traditional extras such as down payments, maintenance, and insurance,” according to the company.
GM unveiled a similar concept earlier this year (paywall), called “Book by Cadillac,” where customers pay $1,500 per month to swap in and out of as many Cadillac vehicles as they’d like. It essentially kickstarted the idea of long-term, on-demand car ownership, but at a price that would likely be far too high for the average consumer. If Volvo’s system can bring the monthly fees down to what customers are used to paying for lease prices (around $500 or less seems reasonable), it’s entirely possible that the concept of traditional car ownership may well become a thing of the past.
Volvo is also in the process of testing and implementing an autonomous ride-hailing service, which it plans to launch in 2021. It doesn’t take much to extrapolate out how this vehicle-subscription service could be a precursor to an on-demand autonomous car service, where users pay a monthly fee to have access to self-driving cars whenever they need them.