Skip to main content
Sister Publication Links
  • Automotive News
  • Automobilwoche
  • Automotive News Canada
  • Automotive News China
Subscribe
  • Subscribe
  • Newsletters
  • Login
  • HOME
    • Latest news
    • Automakers
    • Suppliers
    • New Product
    • Environment/Emissions
    • Sales By Market
    • On The Move
    • Auto Shows
    • Munich Auto Show
    • Geneva Auto Show
    • Paris Auto Show
    • Beijing Auto Show
    • Shanghai Auto Show
  • Features
    • Long Read
    • Interview of the Month
    • Focus on Electrification
    • Focus on Technology
    • Segment Analysis
    • Cars & Concepts
    • Supplier Spotlight
    • Europe By The Numbers
  • Opinion
    • Blogs
    • Commentary
    • Guest columnists
  • Photos
    • Photo Galleries
    • Geneva Photo Gallery
    • Beijing Photo Gallery
    • Frankfurt Photo Gallery
    • Paris Photo Gallery
    • Shanghai Photo Gallery
  • Podcasts
  • Car Cutaways
  • EVENTS
    • ANE Congress
    • ANE Rising Stars
    • ANE Eurostars
  • More
    • Publishing Partners
    • Social Media
    • Contact Us
    • Media Kit
    • About Us
    • Capgemini: All or nothing: Why circular business models require a holistic approach
    • Capgemini: Invent Head on automotive takeaways from CES 2023
    • Capgemini: Securing the industry's future through a radical rethink
    • Capgemini: Succeeding with the automated driving journey through AI
    • Capgemini: The circular economy is spurring new thinking on EV batteries
    • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
    • HEXAGON: Plugging into data is the only way to make winning EVs
    • TUV Rheinland: Ideas, services and certifications for smart mobility
    • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
    • Toyota Europe
    • UFI Filters
    • Facebook
    • Instagram
    • LinkedIn
    • Twitter
MENU
Breadcrumb
  1. Home
  2. Automakers
February 18, 2020 04:32 AM

Care by Volvo poised to gain ground in Germany

Douglas A. Bolduc
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Volvo XC60

    Volvo has increased the appeal of Care by Volvo by adding models such as its top-seller, the XC60, to the program and by offering subscriptions for terms as short as 30 days.

    Volvo’s subscription-based alternative to vehicle ownership, Care by Volvo, is poised to gain ground in Germany this year after making key changes in 2019.

    “If you want, you can return your car after three months, or just do a 30-day trial, without any sort of hassle. That is how much we trust the program.” said Lex Kerssemakers, a longtime top Volvo executive who was named the automaker’s first head of direct consumer business last March.

    One of Kerssemakers’ main responsibilities is making the Care by Volvo scheme, which debuted in late 2017, a success after a bumpy start. The idea behind the program is that a person subscribes to a car rather than buys it. There is no down payment to start the subscription, which includes insurance and maintenance.

    Along with adjusting downward the subscription length, which started out at one year, Volvo expanded the Care by Volvo portfolio, which debuted with just the XC40 compact SUV, to include the XC90 and XC60 SUVs, V60 station wagon and S60 sedan.

    Kerssemakers said the flexibility that was built into Care by Volvo in Germany meant that the program exceeded his expectations last year by topping 2,000 subscriptions. Volvo estimates the subscriptions represent more than 5 percent of the automaker’s total registrations in Germany.

    The aim for 2020 is to boost that number to between 10 percent and 15 percent, he told Automotive News Europe.

    Along with Germany, Care by Volvo is offering its more flexible offer in the Netherlands. The updated program has just launched in Norway, where Volvo will only offer plug-in hybrids and full-electric cars because vehicles with those powertrains account for half of all new-car sales. The UK, Sweden and two additional European countries will join this year, Volvo said.

    Meanwhile, the take rate is below 1 percent in the United States, where Care by Volvo has been considered a threat by dealers.

    The California New Car Dealers Association, which represents nearly two dozen Volvo dealers, filed a petition last year with the state's motor vehicle board, arguing that the Care by Volvo subscription program violates state law meant to prohibit manufacturers from competing with their franchisees.

    Speaking last week at the J.D. Power Auto Summit Volvo Car USA CEO Anders Gustafsson said he expects a revamped version of the subscription program to be successful because it's more integrated with the dealer network.

    The changes in the U.S. also include an expanded lineup and Volvo now allows retailers there to offer vehicles on their lots to subscription customers. Under the original program, subscription customers would have to order the car.

    Kerssemakers said that Volvo’s figures show Care by Volvo has the potential to help its car retailers. “The cars we have subscribed in Germany were all done online and very few via the dealer,” he said, “so the likelihood we would have seen them at the dealer is relatively low.”

    Kerssemakers emphasized, however, that Volvo still needs its dealers, which will continue to deliver the vehicles to customers and oversee maintenance.

    “This is not us against dealers,” he said. “This is to secure that we, Volvo, and our dealers have an answer as the world changes and people buy and own things differently. If we want to avoid becoming a commodity supplier, we need to secure that we keep control our own value chain.”

    Kerssemakers said another key piece of information for dealers about Care by Volvo is that so far the scheme has achieved a conquest rate of more than 90 percent.

    “That could be because of the newness of the program, but normally when you launch a car you are very happy with a 40 percent to 50 percent conquest rate,” Kerssemakers said. “That tells me there is a need for such a [car-ownership] model. Otherwise we wouldn't have had such a high conquest rate.”

    When asked whether Care by Volvo is already profitable Kerssemakers said the scheme is starting to make money in Europe but that is not the case in the United States.

    “In one to two years from now, I can tell you whether it works. I'm convinced it will work because it applies to a need that is there in the market,” Kerssemakers said. “How do we know? Because there are a lot of people who do not have a lot of cash, but they have cash flow. They are prepared to spend that cash flow. And a subscription is the most normal thing in the world.”

    RECOMMENDED FOR YOU
    Russians reluctantly embrace Chinese cars after Western brands depart
    Recommended for You
    Moskvich car 2022
    Russians reluctantly embrace Chinese cars after Western brands depart
    Dacia Sandero with new front grille 2023
    Dacia, MG gain from French demand for low-cost cars
    Smart #1 11.jpg
    Smart dealers optimistic about switch to agency direct-sales model
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up and get the best of Automotive News Europe delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    SUBSCRIBE TODAY

    Get 24/7 access to in-depth, authoritative coverage of the auto industry from a global team of reporters and editors covering the news that’s vital to your business.

    SUBSCRIBE NOW
    Connect with Us
    • Twitter
    • Facebook
    • LinkedIn
    • Instagram

    Founded in 1996, Automotive News Europe is the preferred information source for decision-makers and opinion leaders operating in Europe.

    Contact Us

    1155 Gratiot Avenue
    Detroit MI  48207-2997
    Tel: +1 877-812-1584

    Email Us

    ISSN 2643-6590 (print)
    ISSN 2643-6604 (online)

     

    Resources
    • About us
    • Contact Us
    • Advertise with us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Awards
    • Rising Stars
    • Eurostars
    • Leading Women
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Europe
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • HOME
      • Latest news
      • Automakers
      • Suppliers
      • New Product
      • Environment/Emissions
      • Sales By Market
      • On The Move
      • Auto Shows
        • Munich Auto Show
        • Geneva Auto Show
        • Paris Auto Show
        • Beijing Auto Show
        • Shanghai Auto Show
    • Features
      • Long Read
      • Interview of the Month
      • Focus on Electrification
      • Focus on Technology
      • Segment Analysis
      • Cars & Concepts
      • Supplier Spotlight
      • Europe By The Numbers
    • Opinion
      • Blogs
      • Commentary
      • Guest columnists
    • Photos
      • Photo Galleries
      • Geneva Photo Gallery
      • Beijing Photo Gallery
      • Frankfurt Photo Gallery
      • Paris Photo Gallery
      • Shanghai Photo Gallery
    • Podcasts
    • Car Cutaways
    • EVENTS
      • ANE Congress
      • ANE Rising Stars
      • ANE Eurostars
    • More
      • Publishing Partners
        • Capgemini: All or nothing: Why circular business models require a holistic approach
        • Capgemini: Invent Head on automotive takeaways from CES 2023
        • Capgemini: Securing the industry's future through a radical rethink
        • Capgemini: Succeeding with the automated driving journey through AI
        • Capgemini: The circular economy is spurring new thinking on EV batteries
        • Capgemini: Toyota and Capgemini leaders on how OEMs can handle industry changes and succeed
        • HEXAGON: Plugging into data is the only way to make winning EVs
        • TUV Rheinland: Ideas, services and certifications for smart mobility
        • TUV Rheinland: Testing of automated and autonomous vehicles on test tracks
        • Toyota Europe
        • UFI Filters
      • Social Media
        • Facebook
        • Instagram
        • LinkedIn
        • Twitter
      • Contact Us
      • Media Kit
      • About Us