BMW chooses Tennessee to launch subscription service

BMW AG will begin a car-subscription pilot in Tennessee next week, joining the ranks of automakers experimenting with new ownership models as ride hailing and smartphones upend traditional auto retailing.

The service, called Access by BMW, will be offered by a local BMW dealership in Nashville starting April 2, according to a person familiar with the company’s plans who asked not to be named because the information isn’t yet public.

Automakers are searching for ways to reach younger consumers whose shopping and transportation habits have been shaped by Silicon Valley giants like Uber Technologies Inc. and Airbnb Inc. BMW is following in the footsteps of General Motors' Cadillac, which launched its Book subscription service in January 2017, and Care by Volvo, which combines lease, insurance and maintenance into one monthly payment.

BMW’s North American CEO Bernhard Kuhnt said the company was contemplating such a service at the Detroit Auto Show in January. A spokesman for BMW said the company is planning a subscription pilot program for 2018 but declined to give further detail.

Subscription services allow consumers to flip between different car models as often as they want, instead of committing to one vehicle that they buy or lease. The monthly payments are usually higher than traditional lease contracts, because they cover things like insurance and maintenance.

This isn’t BMW’s first foray into new models for transportation. In January, its captive finance arm introduced a flexible lease program that allows owners of its BMW and Mini brand vehicles in California, Washington and Oregon to share their cars with peers or use them to drive for ride-sharing services. The leases are designed to help BMW integrate itself into “the fabric of the sharing economy,” the company said at the time.

BMW rival Mercedes-Benz also has been contemplating a U.S. subscription program, Britta Seger, Mercedes head of global sales, said in Geneva earlier this month.

"We are currently in investigation in which area to try it out," she told Automotive News.