Mercedes, BMW wade into subscriptions

DETROIT — More automakers are considering subscription models as they try to figure out the future of car ownership — and whether such plans will be profitable over time.

Mercedes-Benz and BMW last week said they are preparing to launch vehicle subscription pilots this year in the U.S. The luxury rivals described the efforts as learning endeavors.

"I do believe these platforms have their benefits," Daimler AG CEO Dieter Zetsche said of subscription plans and other nontraditional ownership experiments. It "remains to be seen if any one of them will have a really profitable business in the long run."

Daimler's Mercedes unit will offer a pilot in an as-yet-unidentified U.S. market this year to help it figure out the potential, global sales chief Britta Seeger told Automotive News at the Detroit auto show.

"We need to learn," Seeger said. "In different markets, we want to try this out."

BMW "most likely" will test a subscription model this year in a U.S. market, BMW of North America CEO Bernhard Kuhnt said in an interview.

"We are in the phase of looking at it and evaluating together with BMW Financial Services," Kuhnt said. "And if we are going to do it, we are going to pilot it first to learn more about it."

Subscription plans generally offer customers a vehicle to drive for a monthly fee that includes registration, taxes, insurance and maintenance, as well as pickup and delivery. Customers typically can switch among available vehicles based on their needs.

BMW and Mercedes would join other brands such as Cadillac, Porsche, Volvo and Lincoln in testing vehicle subscription services.

Porsche said last week that its Porsche Passport pilot in Atlanta, launched in October, is bringing new and younger customers to the brand at rates above its expectations. So far, 78 percent of members in Porsche Passport are not previous Porsche owners, Porsche Cars North America CEO Klaus Zellmer said.

Seeger said Mercedes needs to better understand what she called a "big threat" to the subscription model: What happens if customers don't get to switch to the vehicles they want?

"On the weekend, if it's sunshine outside and if everybody wants to have a cabriolet, and if I apply five times to have a cabriolet and I don't get it, what does this cause?" Seeger said.

Mercedes has subscription pilots in other countries, she said, citing a Smart-branded program in Italy and a Mercedes-branded program in Germany.

BMW hasn't determined the details of its pilot, Kuhnt said. The company is in talks with organizations that have subscription experience to determine the best offer for consumers.

Kuhnt said, "At the end of the day, the consumer is going to decide if that's something they want to do."