There has been a lot of buzz surrounding car subscription services lately, with experts predicting that subscription services will change the face of automotive retailing. With the rise to maturity of the “Millennial” generation, subscriptions services are only expected to increase in popularity. There is definite appeal, especially to millennials, in not being tied down to one single vehicle.
To address this coming shift in buyer behavior, many carmakers have launched pilot subscription services. Access by BMW launched in April, 2018 in the Nashville market. Mercedes-Benz Collection is testing the waters in Nashville and Philadelphia, and Audi Select went live In the Dallas-Fort Worth metro in late September. Ford, Lincoln, Porsche, Volvo, Jeep, and others also have programs in operation, or close to launch.
Of all the subscription pilot programs, The biggest operation to date has been Book by Cadillac. This program started out in early 2017 with what seemed to be great success, but the company announced recently that they will be suspending the service as of December 1, 2018, with plans to relaunch in 2019.
Andrew Lipman, a Cadillac spokesman, confirmed plans for a relaunch of the program early next year, following a Wall Street Journal report Friday, citing unnamed sources, that Cadillac was planning to scrap the program.
“Book by Cadillac is not canceled,” Lipman said. “We are stopping it for a short period of time to then relaunch it based off the learning we have made in early Q1. We are hitting the pause button and we will be back.”
What Does This Mean for Subscription Services?
This announcement regarding Book comes amid many other changes at Cadillac, including a new president this year, and a recent decision to move the brand’s headquarters back to Michigan from New York City. In light of these changes, it is understandable for a program like Book to take a back seat.
However, It is important to note that Book by Cadillac has yet to turn a profit as a program. In spite of this, Melody Lee, former head of the program, had previously told Automotive News that Book is part of Cadillac’s long-term plans to venture into nontraditional retail models and that the goal was for Book to eventually become a profitable business unit.
The program’s fee of $1,800 per month covers insurance and maintenance and allows subscribers up to 2000 miles per month. Subscribers also have the ability to swap in and out of Cadillac vehicles with no long-term commitment. It is unclear what the current subscriber base will do while the program is in hiatus.
As with any new paradigm shift, car subscription services will take time to iron out the wrinkles and figure out appropriate price points and service levels that will lead to long term profits. The demand for subscription services seems to be real. Now it is up to the service providers to work on profitability and long-term viability.
