California Dealer Group Aims to Stop Volvo Subscription Plan

The California New Car Dealers Assn. (CNCD) has asked Volvo Cars of North America to terminate its Care by Volvo subscription service in the state, Automotive News reports.

The group contends that the scheme, which was launched in 2017, violates California franchise and consumer protection laws. The allegations claim Volvo illegally modified its franchise agreements to allow it to directly compete with dealers.

In addition to the cost of the vehicle, the two-year subscription service rolls insurance and some maintenance fees into a single monthly rate ranging from $650 to $850. Consumers can periodically swap vehicles for different models under the plan.

CNCD says the scheme is essentially a re-branded lease that skirts California laws forbidding dealers from “packing” the cost of insurance into a monthly lease payment. The group has met with and exchanged several letters with Volvo but claims the company hasn’t satisfactorily answered its legal concerns.

Volvo maintains it has done nothing wrong and says it has involved dealers throughout the launch of the subscription plan, including asking them to review of an updated version being planned. The carmaker plans to issue a formal response to CNCD, which represents 23 Volvo dealers in California, by next week.

Last month Anders Gustafsson, who heads Volvo North America, told AN that consumer demand for the subscription service has cut into the dealer allocation of new XC40 crossover vehicles for traditional sales. As a result, Volvo is limiting subscriptions to 10% of the overall XC40 supply in affected markets.   

Gustafsson also vows to help dealers renew subscribers—dealers are paid for each vehicle they deliver under the plan—and resell vehicles after the subscription period.