Are You Ready to “Subscribe,” Rather Than Buy or Lease?

Automakers search for easier, friendlier ways to sell their products.

by on Oct.30, 2017

The third-generation 2018 Porsche Cayenne is part of the German maker's new "subscription" service.

Like the new 2018 Hyundai Sonata sedan but not sure it’s the right model for you? No problem. The automaker just launched the Shopper Assurance program which, among other things, offers potential buyers a three-day, money-back guarantee.

Maybe your taste – and budget – runs more towards Porsche, but you can’t decide between the classic 911 sports car, the Panamera sedan or the big Cayenne SUV. No problem there, either, at least if you’re living in Atlanta, where the German automaker has set up the pilot Porsche Passport program. For as much as $3,000 a month, customers in Atlanta soon will be able to switch between as many as 22 different Porsche models pretty much whenever they want simply by using a smartphone app.

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At a time when the Internet has changed the way Americans shop for most everything else, automakers are looking for ways to revise the classic car buying process, an experience often likened to getting a root canal – without the anesthetic. They’re exploring ways to cut out the haggling, speed up the sales process and make it simpler and friendlier. Some are even letting motorists shop at home or office, rather than having to trudge to the dealer showroom.

“We have to make sure we’re retailing on the customer’s terms,” said Adam Chamberlain, vice president of sales for Mercedes-Benz USA, which is experimenting with online used car sales in Portland, Oregon. “We have to make sure we give them the experience they want.”

Those looking for a new vehicle already can lease or buy. But Porsche this week introduced another option that it has dubbed the Porsche Passport.

The $2,000 monthly “Launch” tier lets a customer swap as often as they’d like between four different Porsche models: the 718 Boxster, Cayman S or Cayenne. The “Accelerate” tier, for $3,000 a month, gives customers access to 22 different Porsche models, including the 911 Carrera S, Panamera 4S sports sedan, Macan GTS and the Cayenne S E-Hybrid. There’s an additional $500 activation fee, but registration, insurance and maintenance costs are included in the package.

And swapping vehicles will require a subscriber to simply use a smartphone app developed by Clutch Technologies, a software development company focused on automotive subscription services.

For now, the Porsche Passport pilot program will be offered to only 50 customers through the two dealers in Atlanta, where Porsche is based in the U.S. But the program could be expanded if it proves popular – and manageable.

Audi, another brand operating under the Volkswagen Group umbrella, is offering a concierge rental service, Audi on Demand, in San Francisco. General Motors, meanwhile, launched its own pick-and-choose pilot in New York early this year, Book by Cadillac letting letting buyers switch vehicles as often as 18 times a year for a flat $1,500 montly fee.

Volvo just launched what it also calls a subscription service, Care by Volvo, that is, for now, limited to the brand-new XC40 sport-utility vehicle. Customers pay a flat monthly fee, with no down-payment, and will be able to upgrade to a new Volvo in as little as 12 months.

Free pick-up and delivery for service, with buyers getting a loaner while their vehicle is in the shop, is also included, and that is a feature that a number of automakers have begun to offer, including Lincoln and Hyundai’s recent luxury spin-off, Genesis. Makers are hoping that by enhancing the ownership experience they can entice new buyers to give them a try.

The push for new retail models can be challenging, as automakers have to work around state franchise laws. Mercedes sales chief Chamberlain says the company’s dealers will be central to any new approach it tries.

(Hyundai gives buyers assurance with new car sales process. For the story, Click Here.)

Tesla has been steadfast in opening only factory-owned stores, a position that has forced it to battle in court with local dealer groups in a number of states. In several others, including New Jersey, it has struck deals with state lawmakers and regulators.

The push to find new ways of retailing is especially fierce among brands in the competitive luxury market. When they’re spending $60,000, $100,000, event $200,000 or more, experts stress, customers expect to have things done more on their terms. That’s all the more so with the availability of the Internet, where they can do much of the research that once might have required numerous dealer visits.

But even mainstream brands are exploring new retail strategies that could radically change the way customers buy, lease – or subscribe – in the future.

Long saddled with a reputation for cheap and low-quality products, Hyundai began to change its image a decade ago with the debut of the industry’s longest warranty. This week, it took another step to address traditional concern: buyer’s remorse.

(Click Here for more about the Porsche Passport program.)

Its new Shopper Assurance program actually targets a number of issues consumers typically complain about when buying a car. It will offer “transparent” pricing, the maker announced, flexible test drives, a simpler purchase process and, perhaps most appealing for many potential buyers, a three-day, money-back guarantee.

“We expect this to be a differentiator,” said Dean Evans, chief marketing officer, Hyundai Motor America, adding that, “Our research showed that 84% of people would visit a dealership that offered all four features over one that did not. It is the future of car buying.”

Even for manufacturers still wedded to conventional retailing, things have changed dramatically in recent years, according to Fran O’Hagan, head of the automotive retail consultancy Pied Piper.

“The combination of the internet and wide use of smartphones has had a huge impact on the retail auto industry,” said the California-based O’Hagan. “The role of the dealership and salespeople is still critical,” but where they once were the gatekeepers, he added, buyers usually know what they want before they walk into the showroom, and “the role of the salesperson is to now to help a customer fine-tune their choice of vehicle.”

(To see more about “Care by Volvo, Click Here.)

The Internet could bring even more dramatic changes to automotive retailing over the next decade. Indeed, some speculate millions of motorists may simply stop buying cars in the coming years and switch to ride-sharing companies like Uber and Lyft as they switch to driverless vehicles and sharply lower the cost of their services. That, said O’Hagan, will force manufacturers and their dealers to get even more creative to keep customers in the retail market.

(This story first appeared on .)

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One Response to “Are You Ready to “Subscribe,” Rather Than Buy or Lease?”

  1. Jose Puente says:

    Flexdrive is a vehicle subscription platform that enables dealers to offer vehicle subscription of new and used cars to retail customers as an alternative to buying or leasing.

    Launched in 2014, Flexdrive has had thousands of subscribers.

    The Flexdrive program includes the car, insurance, service and maintenance and roadside assistance.

    Flexdrive is currently available in New Jersey, Philadelphia, Atlanta and Austin with additional markets available in early 2018.

    Flexdrive is a joint venture company owned by Cox Automotive and Holman Enterprises.