Volvo has officially terminated its vehicle subscription program, Care by Volvo, amid a broader industry shift away from subscription models to enhance operational efficiencies and refocus on core sales strategies. Launched in 2017 as an alternative to leasing, Care by Volvo offered customers flexibility by allowing them to swap vehicles or terminate contracts after a few months. Despite its initial promise, Automotive News just learned that the program ended on August 1, 2024, with existing subscribers allowed to complete their terms and receive credits toward new purchases or leases.

According to Volvo spokesperson Russell Datz, the decision to suspend the subscription service in the United States and Europe was made to concentrate on the automaker’s core customer offerings and the introduction of new products. “This allows for concentrated focus on our core customer offers and the coming introduction of new products, [and an] increase in operational efficiencies,” Datz explained, pointing to cost-cutting as a significant driver behind the move.

Care by Volvo initially aimed to provide a hassle-free car ownership experience by bundling the vehicle, insurance, roadside assistance, and maintenance into a single monthly payment, starting at around $600. While the program gained profitability by 2020 and attracted a new, unique customer base—80% of subscribers were new to the Volvo brand—it also faced significant challenges. These included dealer opposition and regulatory scrutiny, highlighted by a six-month investigation by California’s Department of Motor Vehicles in 2019, which found that Volvo had failed to adequately inform dealers about changes to the franchise agreement and provided preferential treatment to certain stores when allocating subscription vehicles.

Despite making adjustments in 2019 to provide more flexibility and differentiate the program from traditional leasing, these changes were insufficient to secure the long-term viability of Care by Volvo. The subscription model blurred lines with traditional leasing and created friction with dealer franchise laws, ultimately contributing to its discontinuation.

Volvo’s exit from the subscription market mirrors a broader trend in the automotive industry, where several other manufacturers, including Audi and BMW, have also withdrawn from subscription services. Currently, Porsche remains the only major automaker still offering a subscription model, albeit in a limited capacity and at a premium price point.

INSIDER TAKE

Volvo’s discontinuation of its subscription program underscores a significant pivot away from experimental ownership models towards more traditional approaches. While the subscription model initially promised flexibility and drew new customers, practical challenges—such as regulatory hurdles and dealer resistance—highlight the complexities of disrupting established sales frameworks.

This serves as a cautionary tale about the limitations of subscription services in markets heavily regulated by legacy business models and dealer networks. For subscription executives, Volvo’s experience emphasizes the importance of aligning new business models with existing market structures and understanding the regulatory landscape. As automakers recalibrate their strategies, the emphasis will likely return to optimizing traditional sales channels, enhancing customer retention through loyalty programs, and offering differentiated product experiences that fit within established dealership ecosystems.

The case of Care by Volvo illustrates that while subscription models can generate initial interest and profitability, scaling them sustainably requires overcoming significant structural and regulatory challenges that may not align with every industry’s operational realities. As the automotive sector continues to evolve, companies will need to carefully balance innovation with the practicalities of their operational environments.