Subscription services whether for the vehicle itself or features within, offer many advantages for dealers.
Over the last decade, OEMs have been looking at new ways to woo consumers to their specific brand and the vehicles within it. Beyond traditional cash purchase, leasing, and finance, subscription services have gained momentum over the last few years.
According to James Hancock, Director, OEM Strategy and Analytics, Canadian Black Book (CBB), convenience plays a big factor and is a major growth driver for vehicle subscription services. He explains that a key part of the service is the ability to have access to different vehicles. “In theory, the subscriber could have three different vehicles in a single day, a large SUV to move people; a pickup truck to move supplies, and a sports or luxury car for date night.” Hancock says, that this level of accessibility and flexibility, combined with an attractive monthly price (often inclusive of insurance) makes the idea of vehicle subscription “an enticing proposition for many consumers.”
But what about dealers? Hancock believes there are a number of opportunities available to them via subscriptions services. A key one is that a car-subscription service allows a dealer to expand their client base. It also provides the dealer with a “constant contact point with the consumer,” as well as providing the consumer with an opportunity to “try before they buy.” Additionally, it also offers consumers a point of contact for when the time comes to actually purchase a vehicle from the dealer.
Volvo is among the OEMs currently offering subscription services. Its Care by Volvo program is billed as the “all-inclusive way to enjoy a new Volvo.” According to Lucas Dias, a spokesperson for the brand in Canada, the program is part of Volvo’s commitment “to providing ownership models that meet the changing needs of our customers.”
The program provides consumers with a chance to build their vehicle online and sign up for a monthly payment plan. They are then required to submit a deposit to reserve their vehicle, file a credit application 30 days before the estimated arrival date of their vehicle, and then arrange a pick-up day and time with their preferred retailer when the vehicle is ready. Customers can apply for a 24-month subscription with the option to upgrade to a new vehicle any time after the first 12 months. At the time of going to press, this included Volvo’s S60 and V60 R-Design, with additional models set to be added to the program in the future.
While this and other models like it add a new level of convenience and affordability, according to James Hancock, current inventory supply shortages have slowed the adoption rate of subscription services. “Retail sales are currently the focus, as retail sales channels are typically the largest profit margins for both OEMs and dealers,” he says. “Once new car supply normalizes, I would anticipate a rising number of car subscription services coming to market.”
Besides enticing consumers into a new vehicle, subscription services also offer other potential benefits for dealers, particularly on the used vehicle and fixed ops sides of the business. “Retired subscription vehicles typically, are nearly new,” says Hancock (often a year old or less). As a result, the combination of newness, the balance of the factory warranty, and low mileage often makes them prime retail stock, particularly in situations like the present where both dealers and consumers are clamouring for any premium used cars and trucks they can get their hands on.
Subscription services can also help consumers get familiar with different types of vehicles such as EVs, providing them the opportunity to dip their toes in the water as opposed to signing up for a full lease on one. This can help overcome major obstacles facing adoption such as range anxiety, charging, and battery replacement costs, which currently, are still very real concerns for many people.
There are also advantages to fixed operations since due to their nature, subscription services provide dealers with additional vehicles in their parc which means during slower periods, these cars can be serviced, offsetting any lulls in traditional customer pay or warranty work.
Besides the actual physical vehicle itself, subscription to services within it can also provide notable advantages for dealers. According to Mike Mazgay, Vice President, Automotive Remarketing and Dealer Operations with SiriusXM in Canada, in-vehicle entertainment and streaming services can be another effective way for dealers to boost retention in both their sales and service departments.
In SiriusXM’s case, these include offering incentivized training for dealers in which staff have to complete a series of modules to earn free streaming credentials. “The purpose of this,” says Mazgay, “is to educate dealers and partners on the features and benefits of SiriusXM, so they can effectively communicate the benefits of the free trial with their customers.”
Additionally, in 2021 SiriusXM launched its Auto Social Media channels which are specifically targeted toward dealers and partners. “SiriusXM Auto is active on Twitter, Facebook, Instagram, and LinkedIn, and through these platforms, dealers can learn about SiriusXM Canada dealer programs, training, SiriusXM with 360L, the dealer app, customer trial benefits, content and more,” says Mazgay. “They are also able and encouraged to participate in interactive contests and to receive shout-outs when they tag #siriusxmauto or #siriusxmcanada.
Pre-owned and service
SiriusXM also offers a Pre-Owned and Service Lane Program for dealers that allow their customers to get a three-month complimentary trial to the SiriusXM Platinum service when they either purchase a used vehicle from the dealer or whether eligible customers take their vehicle in for service. Additionally, there’s also an extension of Service Lane called Service Plus, which allows dealers to offer a three-month trial of the Streaming Platinum Plan to customers that don’t already have SiriusXM equipped vehicles.
Ultimately, the objective is to elevate the customer experience and as Mazgay notes, SiriusXM is continuing to expand its offerings and provide its customers with an audio experience they simply can’t get anywhere else. “In 2022, we’re also looking at providing exclusive, once-in-a-lifetime subscriber events to put our customers up close and personal with some of the biggest names and the brightest stars.”
Additionally, with SiriusXM now offering its 360L platform that combines both satellite and streaming content within a single, cohesive in-vehicle entertainment platform, the choice for consumers and the ability for dealers to engage with their customers has arguably never been greater.