SANTA BARBARA, Calif. — Maybe vehicle subscriptions, a much-hyped alternative to traditional buying or leasing, aren't the next big thing after all. At least not yet, based on the lackluster interest in Lincoln's first large-scale experiment.
Subscriptions sound revolutionary: Consumers pay a monthly fee for the convenience of swapping vehicles often and letting someone else take care of maintenance and insurance. But the cost of operating such a program can make the price tag surprisingly expensive, and Lincoln says the pilot it started this year in California has had little demand. Many of those who sign up cancel after only one or two months.
While Lincoln has no plans to discontinue the program, officials say they'll have to alter it — including getting dealerships more involved — if it's to grow beyond the pilot.
"I've been surprised how few people are genuinely interested in that type of ownership," Robert Parker, Lincoln's director of marketing, sales and service, told Automotive News at a Lincoln press event here. "If you had asked me a year ago, I would have said this is the next big thing. A lot of people are struggling to make the math work."
Lincoln's program gives customers access to used vehicles through Canvas, a digital platform owned by Ford Motor Co. It started with 2015 models and added 2017s, with prices ranging from about $500 to $950 per month.
Parker said most of Lincoln's subscription customers want a short-term vehicle — after an accident or while shopping for a long-term purchase.
"The amount of people coming out after one or two months is very high," he said. "It's just kind of an interim process."
Parker said finding the right vehicle mix also has been a challenge, as the brand doesn't want to damage residual values by having vehicles come out of service and go to auction too early.
Lincoln's experience echoes some analysts' concerns.
While Lincoln has tried to keep prices low by offering used vehicles, other automakers have launched services for new vehicles that can cost thousands of dollars a month. Edmunds this year studied subscription programs and found that, even with insurance, maintenance and other fees factored into monthly payments, subscription costs far exceed what consumers pay for leases.
"At these price points that we're seeing, [a subscription] virtually makes no sense to anyone," said Edmunds senior analyst Ivan Drury, calling such programs a "rich person's toy."
Edmunds has also said that a subscription's main attraction — freedom of choice — can be harder for luxury brands that lack product variety.
Lincoln offers the MKZ midsize sedan, MKC compact crossover, MKX midsize crossover and Continental large sedan.
Parker said the brand is still experimenting with the service. One potential change, he said, would be to "take it closer to the dealers."
Customers sign up for their vehicle through the Canvas website. Parker said involving dealers could help buyers learn more about Lincoln and potentially help them keep the subscription longer or transition to more traditional ownership within the brand.
"It's like event marketing to me," Parker said. "Event marketing only works if the distance, metaphorically speaking, between the event and the dealership is very short. If I treat you to a great experience driving a Lincoln but there's not a dealer around, the likelihood of you buying a Lincoln is pretty low."
He said the brand is assessing its options but will likely end up with a service that combines what Lincoln has tried so far with a larger dealer role.
Ford has actively piloted new ownership models — and has acknowledged when they haven't worked.
In 2016, Ford Motor Credit Co. launched Ford Credit Link, a lease-sharing program that let three to six customers share a lease, scheduling their driving time and dividing payments any way they'd like. It tested the program at three dealerships in Texas, but no customers signed up and it closed the pilot after less than a year.
"I'm fully convinced somebody's going to reinvent leasing," Parker said. "We're waking up every day trying to figure out what's the next big thing. A year ago I would have told you subscriptions, but now … that's why we didn't go whole hog."
Jackie Charniga contributed to this report.
