LUXURY vehicles will now be available on subscription in the United States as part of an innovative new move from Mercedes.
The automotive giants stated in a press release in April that they would be launching the ‘Mercedes-Benz Collection’, a luxury vehicle subscription service that would allow customers to “switch in and out of vehicles depending on their needs or lifestyle.”
The service is set to launch in June this year in partnership with Mercedes-Benz dealers. Initially, the trial will be piloted in Nashville, Tennessee and Philadelphia, Pennsylvania. Customers will be able to choose from a range of vehicle types including SUV, sedan, coupe, cabriolet, roadster and wagon models.
Technology Forward
Demonstrating that Mercedes-Benz is very much in the 21st century, customers will be able to make their bookings with a technology-forward subscription app. A spokesperson for the company said: “The Mercedes-Benz Collection experience is equal parts app- and concierge-driven. Once subscribed, customers initiate vehicle exchanges, concierge communication and other actions via the app.
“Concierge staff then ensure that the delivery is consistent with the details and preferences in the customer’s profile. Subscribers will enjoy unlimited access within their tier and no mileage limitations. The monthly subscription fee also includes insurance, 24/7 roadside assistance and vehicle maintenance.”
How Subscription Models Work
Mercedes-Benz is not the first company to offer the subscription model. In 2017, Porsche launched the Porsche Passport, allowing customers to pay $2,000 per month in exchange for access to eight different Porsche vehicles, including the basic model Macans and Cayennes, allowing for 718 different variants. Like Mercedes, Porsche customers too can experience higher-end subscription services by upgrading and paying an extra $1,000 per month, which will allow them to drive Panameras and 911 models to their hearts’ content.
Separate from monthly running costs, subscribers have to pay a joining fee, for example, $500 in the case of Porsche, and pass all the required credit checks. Similar to long-term leasing deals, those who sign up for subscription services do not actually own the car, but do have an all-inclusive monthly fee. Generally speaking, this will cover all the expected costs of owning a car including insurance, roadside assistance and maintenance; however, users will have more flexibility in ‘switching’ cars at short notice.
The terms of the subscriptions vary from provider to provider, for example, some will allow customers to change their cars monthly, others weekly. Some providers may rent out newer vehicles while some may focus on used cars. The service is slowly beginning to proliferate amongst many well-known vehicle manufacturers, including Porsche, Volvo and, most recently, Mercedes.
Why Subscription is Becoming More Common
At $2,000 per month, subscription may sound like something that’s limited to fans of higher-end vehicles only, but with changes in technology, it could soon become more commonplace. Mercedes have not yet disclosed how much their service will cost, but to stay competitive with brands such as Volvo, they may have to consider offering cars at a much lower $600 per month.
Whatever pricing structure they choose, Mercedes will certainly be following trends of late, whereby ‘access ownership’ is becoming more popular than ownership itself, i.e. Uber. With these digital trends coming to the fore, many industries are going through huge shifts, for example, subscription services Netflix or Spotify, which have revolutionized the entertainment and music businesses respectively.
By giving customers what they want, when they want it, Mercedes has demonstrated that they are willing to adapt to fast-changing customer needs, all the while still providing traditional customer service through features such as the concierge service. The trial may only be available in two states, but we predict it could go global very soon.
