At first glance, it is unprofitable, but not everyone needs to have a car, and the manufacturer has to invent a new way of binding the client to itself.
June 3, Volvo announced the launch of CarDrive service in Russia – a car rental by subscription. Although similar services have already worked on the market (for example, Willz), Volvo is the first of the automakers with a similar service: a week before the official announcement of similar plans was told in Hyundai, but extremely uncertainly.
TJ talked to Volvo about the new service and briefly talks about what it is and why it is another example of how the Internet is changing a huge industry.
How does the subscription work
All details from the leak at the end of March were confirmed:
- The service offers only one model – the Volvo XC60 crossover in the T5 Inscription package (2 l, 249 hp);
- Cost – 59 500 rubles per month;
- Term – exactly 1 year;
- At the start, only 50 cars will be available;
- Conditions – from 25 years and older, the experience is not taken into account.
Although we are not talking about buying a car, the client will still have to go through a bank scoring – the service must make sure that he is able to pay the same amount per month. Scoring will have to take place in one of the dealerships, and so far only in Moscow and the Moscow region. To invite to a personal meeting, leave the application can begin as early as June 4.
The car can be transferred free of charge to Volvo technicians for maintenance (they give the customer a replacement car for the duration of the work) and change the wheels from summer to winter and back. Transport tax, comprehensive insurance and OSAGO, as well as storage of winter and summer tires are included in the subscription price.
There are a lot of restrictions specified in the rental rules :
- THAT is required to be carried out regularly when it is required according to mileage
- The rules indicate periods when a rubber should be driven: from November 1 to April 1 – in the winter, the rest of the time – in the summer;
- Fines and essential repairs are paid by the tenant himself;
- Smoking in the cabin is not allowed;
- You can ride only in the Central and North-Western Federal Districts – that is, you will not be able to ride a Volvo XC60 by subscription to Nizhny Novgorod, for example. In case of going beyond the permitted area, the engine can remotely block and submit a statement about the hijacking;
- Mileage is also limited: the subscription includes 4,000 kilometers per month and 30 thousand kilometers per year. Twice for the rerun you can pay extra (20 thousand rubles for 2.5 thousand kilometers), but it is still limited to 35 thousand kilometers – upon reaching this number the subscription ends;
- This machine can be used not only by the one who pays for the subscription, but also by the second driver – his client can designate it himself. However, the use of the car commercially – for example, in a taxi – is prohibited by the rules;
- You can complete the subscription earlier than 1 year, but then the remaining amount will be recalculated “in accordance with the tariffs” – it is assumed that it will grow, and it is extremely unprofitable to cancel the subscription before completion;
- The car can not be extended or redeemed after 1 year of rent – it is resold in the secondary market.
What is a subscription machine for a consumer?
CarDrive is mentally similar to something between car sharing and buying a car: you do not own a car, although it is the same all the time. The main difference is that Volvo produces exactly the new car, and not the one that was already in use: apart from the tenant, no one got into it or used it before.
Subscription is not a loan or leasing. There is a monthly payment, but there is no down payment, as with a loan, and at the end of the lease the car is not transferred to the payer in the property, as in the case of leasing. All the time of use the car remains in the property of the dealer.
In theory, reducing the chain to two links (manufacturer → buyer) should reduce the final price for the consumer, but in Russia there’s really nothing to compare prices with. The closest competitor, Willz, has a fleet of 43 cars, Vedomosti wrote in March, and among them there is a Volvo XC60 (albeit in a lighter set) – a subscription to it will cost 95 thousand rubles a month, but Willz is much more flexible and supports cancellation of a subscription without fines, although the allowed mileage there is less.
compared the Volvo subscription with the operational leasing and roughly calculated the difference in spending with the purchase and credit. The official price of the new XC60 is 3.8 million rubles, which immediately adds insurance of 200 thousand rubles. When registering the price of the car immediately falls, and even the most have to carry out and pay for THAT.
For three years, you will have to pay about 3 million rubles, which is more by 900 thousand than by subscription: “Having come for a car of 4 million [on credit] for three years you will immediately pay 800 thousand of the first installment, 200 thousand of insurance, you will pay annually 350 thousand for interest and more than a million for a car. First year 2.35 million, then two years 1.4 million each. In three years you will have a car worth 2.4 million. ” The difference is that when buying a car will remain with the owner (but if he wants to get rid of it, he will have to sell it himself – this is a headache), and at the end of the subscription he will not have any car – but he can take a new one once a year (and do not care to sell it at the end of the term).
How the subscription service is seen in the company
Volvo obviously wants to adjust to the trend of subscriptions to anything you want: from music and movies to laundry and dry cleaning . Renting a premium car (and the XC60 is an expensive model) is quite reminiscent of renting premium housing: you are immediately given everything ready and charged to the maximum, you pay a significant amount per month, but in the end you do not have housing left. There are certain freedoms and certain restrictions.
For the most part, a subscription service is the development of another sales channel for Volvo. Now most of the cars are sold offline: this process is very different from dealer to dealer. In fact, Volvo is only a manufacturer, and all product relations, including a bold piece of service maintenance, are tied to partners. Prices for the same car also differ from different dealers, and the buying process is complicated by the need to bargain (although for those who are looking to benefit, it is good for it).
The company believes that amid the development of subscriptions, a class of people appeared everywhere on the Internet who would like to receive a car extremely quickly and without the agony of choosing a dealer, a bank, and other circumstances. It is assumed that this can be secured corporate clients who came to work or live in the Central region for a while, and all this time they want to have a car at their disposal.
In other, in contrast to the digital services CarDrive does not give the car instantly. Even after paying the first installment, it will be necessary to wait for about two weeks until the car is registered – Volvo cannot yet decide to buy the car from the dealer and register it in advance, because after that it will not be considered new by market standards.
With the help of a subscription, the company wants to bind the client more strongly to himself, and not to the dealer: all communication with the tenant takes place through a personal account on the Volvo website, payment also passes through their acquiring partner, not the dealership. And although the volume of sales through this channel is still small – only 50 cars out of about 3 thousand sold XC60 in Russia per year (according to 2018) – the company is going to increase the subscription globally to a proportion of 50% of the total volume of cars sold by 2025.
Why the service was called CarDrive in Russia, and did not expand Care by Volvo’s global subscription to the country – an open question: the service is still experimental, and the company is not even sure about the exact number of cars available by subscription. The opportunity for the company to make money in this direction rests on whether there are those notorious customers who consider the process of buying and owning a car after several years of use to be burdensome, and how carefully they will drive.
If all the cars are beaten or stolen, Volvo will not even beat off the money for the cars with fines – so the company does not yet have enough data on the culture of using such services in Russia, the project is considered pilot.