Dealers want a piece of the auto subscription action, too

FlexWheels sounds a lot like the subscription plans that Cadillac, Mercedes-Benz and other auto brands have been rolling out in the past year. Customers can swap vehicles up to three times a month and don't have to worry about insurance, maintenance and other hassles that come with traditional ownership.

But there's a key difference: FlexWheels  is run by a Florida dealership group — not an automaker — so its customers aren't limited to a single brand's lineup.

The broader array of choices is one of the biggest advantages that dealerships getting into the subscription business hold over factory-backed programs such as Book by Cadillac and Access by BMW.

The entry-level FlexWheels plan, which costs $1,100 a month with a one-year commitment, lets subscribers go from a BMW 440i to an Audi A4 to a Cadillac XT5. Have a home project to tackle? A FlexWheels concierge can drop off a Ford F-150.

"We've had some discussions with manufacturers regarding this, and they don't know the answers entirely," said Erik Day, CFO of the company behind FlexWheels, Warren Henry Auto Group in Miami. "But they will admit consumers will prefer a subscription that offers a wide variety of makes and models."

Warren Henry, which has nine stores selling 12 brands, sees an opportunity in helping more dealers start subscription plans. It's developing FlexWheels into a package that other groups can sell to their own customers.

"We're trying to create a win-win solution," Day said. "Everyone's telling the dealer your days are numbered. We're trying to turn it around: Why don't we bring this platform to us, the dealer network, and give them the strength and the power for this longer-term initiative?"

Few dealership groups have been brave enough to try their hand at subscriptions so far. Only 4 percent of those that responded to a recent survey by Auxilio Group said they offer such a program, but 51 percent said they were considering the idea. Nearly a third said they weren't familiar with the concept of vehicle subscriptions.

Dealers who have launched subscription services cite a variety of reasons, said Tim York, managing partner of industries at accounting firm Dixon Hughes Goodman, which formed Auxilio with consultancy NCM Associates. Some want to build their brand, others want to offer consumers options outside of personal car ownership and most want to create a new revenue stream.

"If you're going to put 100 vehicles on the street, it takes a lot of money. So the question is what do you want to be with subscriptions?" York said. "Some dealers want to make money with it, some want to experiment with it and some haven't even heard of it."

"The role of the salesperson in our industry has forever been engineered around the assumption that someone is buying an asset," said Adam Robinson, CEO of Hireology, a hiring and retention technology provider in Chicago. "In a world of subscription-based automotive sales, you're not selling an asset. It's almost like a concierge. Those skills are very different from a closer."