Wed | Nov 14, 2018

No need to buy a Cadillac, Mercedes-Benz or Volvo when you can simply subscribe

Published:Sunday | August 19, 2018 | 12:00 AM
Cadillac
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In a world awash in hassles, this seemed like a dream come true. A near-new Cadillac delivered to your home, office, or wherever else you'd like. No insurance or maintenance to worry about. If there are issues, a 'concierge' is an email or phone call away.

Grow tired of the car? Just go to the app and pick out another car.

I could get used to this.

Over two weeks, we tried out two SUVs and a hot station wagon that are part of the Book by Cadillac subscription programme. Cadillac was one of the first with a programme, but the notion has caught on. Now, Mercedes-Benz, BMW, Porsche, Hyundai, and Volvo are among those adding subscriptions to leasing and straight-out sales as ways to move cars off lots and into customers' hands.

"It's been buy-and-lease since the car came out," said Karl Brauer, executive publisher for Cox Automotive. "It's overdue. It's a reflection of the world in which we live in."

That's a world in which everyone subscribes to everything. It might be a smart phone plan, Hulu, Netflix, Spotify, online video games, a gym, meal kit plan, a wine club, to name a few. Cars would seem like a natural extension.

Just like other subscriptions, the programmes can be handled entirely through smart phone apps. Signing up is easy and quick, as is ordering new models whenever a driver tires of the one he or she is driving.

Cadillac is serious about trying to make a success of its Book experiment, which is, for the moment, limited to three cities: Los Angeles, New York, and Dallas. It believe that the programme's flexibility will be its winning card.

"Book by Cadillac affords them the opportunity to really have the choice of car, when they want it, where they want, how they want it and from really as long as they want it," says spokesman Christopher Smith. "So you can be a member for one month, four months or six months and simply cancel the membership when you no longer need it."

Besides a chance to try to pick up a little extra business that might have escaped them otherwise, automakers have another prize in mind when it comes to subscription services. They want to collar more millennials, who they see as the future of their brands and ones who are most accustomed to the subscriber way of life.

Automakers agree that subscription customers tend to be younger than other buyers, having come to wealth earlier in their lives. But subscription services aren't cheap. No matter how they are structured, they can be far more expensive than buying or leasing.

Book by Cadillac, for instance, charges a $500 initiation fee and $1,800 a month, which is partly the price of convenience, partly the price of having insurance factored in. By contrast, leasing a mid-level XT5 crossover, like one of the three vehicles we tried out, has been listed on Cadillac's website at $517 down and $517 a month.

"Stripped down to dollars and sense, it's still price prohibitive for a lot of shoppers out there," said Jeremy Acevedo, manager of industry analysis for car-buying website Edmunds.com. As a result, "We don't see a lot of takers right now."

But there's hope as automakers refine their programmes. BMW introduced a new, lower tier at $1,099 a month, and it dramatically lowered the price of its upper levels. The mid-level tier, for instance, is now $1,399 a month, down from $2,000. By no means cheap, but certainly less.

The changes are to be expected as automakers try to refine the business model and iron out the kinks, like how to efficiently schedule and deliver cars.

The allure to customers is its simplicity - a single whopping monthly payment. Beyond that, all buyers need to plunk down is gas money.

"Our customers really want simplicity," Smith said. "It's the ease, and it's the choice."

Ah, the choice. Thumbing through an array of Cadillac vehicles on the app, I first pick a car that has been added to the Book fleet but is no longer sold new at dealers - the CTS-V performance wagon. Why add a four-year-old vehicle? Because it was cool and beloved, even though it was for a limited time only and only in Los Angeles.

The 556-horsepower V-8 in the CTS-V is breathtaking in its smoothness, and how powerfully it winds up the car, even at lane-changing speeds on the freeway. Yes, as a 2014 model, the interior was a little dated by today's standards, lacking automatic braking and other features that luxury customers have come to expect. But it wasn't about that. It was more one of those vehicles that make a statement.

 

RIGHT SIZE

 

Next came something more practical, modern, and representative of Cadillac's future. I had an XT5 crossover, representing the sweet spot of the modern luxury car industry. It's an SUV that was just the right size for city dwellers, easy to park yet enough space inside. Plus, the interior felt like a fast-forward to present day after spending a week in a 2014 model.

Last came Cadillac's crowning glory, the mighty Escalade. The version that was delivered to me wasn't only the extended version - as if it weren't large enough to begin with - but one that had 59 miles on the odometer, an indication that Book by Cadillac is handing out the freshest of cars. As big and tall as it was, the Escalade drove pretty well, and a self-parking feature took the angst out of not being able to clearly see the corners of the big SUV.

Book by Cadillac allows 18 vehicle changes a year. One of the deliverers indicated that one of the early issues that has arisen is that owners fall in love with particular models and don't want to change. To get around it, Cadillac requires that vehicles be brought in for maintenance for a few days if a lot of time has gone by. It also forces customers to sample some of Cadillac's other offerings.

The number of model switches is just one of the kind of policies that vary between automakers.

Volvo, for instance, started its programme by offering a subscription to only a single model, the XC40 small SUV. Now, starting in the fall, it will be offering one of its newest models, the S60 sedan. But even at that, spokesman Jim Nichols says the programme is already a success.

"We sold what we projected were a year's worth of subscriptions in four months," he said.

Mercedes is betting that offering one of the wider selections of vehicles will make the difference - even though it is starting its programme in two test cities only, Nashville and Philadelphia.

"There comes that time when you have to pick up gutter piping at Home Depot," Boland explained. "Based on what you're doing in your life, you have to have the right vehicle."