Care by Volvo jumped off the starting line with a hiccup, but the subscription program has become more popular than executives first expected.
Automotive News (subscription required) reported Monday that within four months of the program's launch, Volvo ran out of the entire number of subscriptions it anticipated for the first year.
Naturally, this has created major backlogs and stirred up frustration with dealerships. Volvo dealers also feel concerned the model could overshadow traditional auto sales. Further, Care by Volvo has also squeezed supply of the XC40 crossover, which was the first Volvo offered in the program.
Anders Gustafsson, CEO of Volvo Cars of North America, said Care by Volvo claimed 15 percent of XC40s available to customers. The brand has since enacted a 10-percent cap on XC40s for the subscription model to ensure dealers have enough supply to sell. The CEO said he's also traveled to Volvo dealers to hear out concerns and help understand how dealers can better fit into the subscription picture.
2019 Volvo XC40 T5 AWD R-Design
The program starts at $650 per month and two years worth of subscription. The flat fee nets subscribers a Volvo XC40, insurance, maintenance, and the ability to swap into a new Volvo after one year. Should a subscriber choose to step into a new car after the one-year period, it resets the two-year-long subscription he or she signed up for at the beginning.
Today, subscribers are now part of wait lists that extend into 2019 before a vehicle will be ready. Gustafsson said the growth is "fun," but the unexpected demand for Care by Volvo has "complicated" the business somewhat.
Volvo's success flies in the face of competitors. Cadillac notably paused its Book subscription program just shy of its two-year anniversary. Cadillac's program was vastly different as it offered the ability to swap into more cars on a much more frequent basis. However, this came at a relatively steep $1,800 monthly fee.
Where Volvo may have found success is the cap it placed on vehicle swaps. By only giving subscribers the chance to switch cars at most once per year, it keeps costs down for both sides of the transaction.
