Mercedes is pulling the plug on its Mercedes Collection subscription service.
Mercedes-Benz is canceling its two-year-old subscription service, the Mercedes Collection, the latest automaker to pull back on a concept some have brightly proclaimed the future of the automotive business.
Not all subscription services are the same, though Mercedes followed the same path as competitors like Porsche and BMW, allowing motorists to pay a set monthly fee in order to have access to a variety of different vehicles they could switch in and out of. The program also covered virtually all costs, including taxes, repairs and maintenance, as well as insurance, for one flat price.
Mercedes’ departure follows Cadillac’s cancelation of its own program, Book, and Ford’s abandonment of a small pilot project of its own. A number of competitors remain wed to the subscription model and Nissan launched its own program earlier this year. But the coronavirus pandemic, which has resulted in nationwide inventory shortages, could lead other manufacturers to question not only the benefits of such services, but also whether they can handle the logistics at this time.
(Cadillac suspends subscription service.)
“From the beginning, Mercedes-Benz Collection was designed to be a pilot program; an experiment for us to learn about the luxury automotive subscription marketplace and its customers,” said a statement from the German luxury brand. “After two years in operation, the pilot program has run its course and it is now time to sunset the MB Collection.”
Mercedes-Benz cancelled its subscription program, which was designed to be an “experiment,” officials noted.
The automaker left open the possibility of using “the information and experience we’ve gained through the pilot” for possible “future initiatives,” but offered no sense of when that might happen – if it ever does.
As the first subscription programs rolled out, they were greeted with plenty of praise and forecasts that concepts like the Mercedes Collection, the Porsche Passport and Care by Volvo could become the wave of the future for an auto industry increasingly interested in revising a century-old business model.
The programs have varied significantly in details. Some offer access to every product in a brand’s line-up for a set fee, others to a limited number of products. Some let customers swap from one product to another only occasionally, others permitting a switch as frequently as the motorist wants.
Volvo, for its part, does not allow vehicle swapping but does offer the fundamental element of vehicle subscription programs that seems to resonate most with buyers: a one price model that covers pretty much everything but gasoline.
(Volvo’s Care subscription program key to growth plan.)
Several things appear to have caused Mercedes and Cadillac to put on the brakes. For one thing, subscribers have been less enthusiastic than expected about swapping in and out of different products, perhaps reflecting the hassle that causes in terms of carrying around personal items, as most motorists do.
There is also the logistical challenge for automakers and their dealers who need to ensure they have enough vehicles at the ready to meet a customer’s request whenever it comes in. Depending upon the level a Mercedes Collection opted for, the monthly fee would run anywhere from $1,595 to $3,595, the top tier offering access to the automaker’s AMG GT supercars.
Mercedes pilot subscription program even allows users to spend a little extra to get behind the wheel of some vehicles in the Mercedes-AMG line-up.
Right now, however, inventories are running low across the U.S., in large part reflecting the two-month shut-down of automotive production in the U.S., and similar pandemic-related closures abroad. According to Cox Automotive, about 2.6 million vehicles are in dealer hands across the U.S., at least 1 million below the norm for this time of year. It’s questionable how quickly things will get back to normal, but that could take until late 2020.
While some manufacturers appear to be skeptical about the benefits of their subscription programs, others appear to like the idea and are expanding availability. Nissan only last February launched the Switch service in Houston, with three tiers running from $699 to $999 a month, the latter giving a customer access to its GT-R supercar.
And Volvo, which does not include car swapping in its Care program, has expanded the markets where it is offered – though it has yet to expand beyond the XC40 model it originally used to launch the service.
(Ford Motor Credit sells subscription service Canvas to Fair.)
Even for those carmakers who are moving ahead with subscription services, the pandemic and related inventory problems could encourage them to pull back on expansion plans in the near-term.
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Mercedes Kills Collection Subscription Service – Will Others Follow? - Paul Eisenstein
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