Volvo Car USA expects its revamped subscription program to be successful because it's more integrated with the dealer network, CEO Anders Gustafsson said.
Speaking at the J.D. Power Auto Summit here Friday, Gustafsson noted the automaker's Care by Volvo subscription service has faced an "extremely bumpy road" since its 2017 introduction. The California New Car Dealers Association, which represents nearly two dozen Volvo dealers, filed a petition last year with California's New Motor Vehicle Board, arguing that the Care by Volvo subscription program violates state law meant to prohibit manufacturers from competing with their franchisees.
"We need to have an extremely integrated system with the dealers," Gustafsson said. "The dealers shouldn't feel like we're taking something away from them. We've changed the approach."
The changes, part of what he called Care by Volvo 2.0, went live last year. They include an expanded lineup of the XC60 and XC90 crossovers and V60 Cross Country wagon, in addition to the XC40 compact crossover and S60 sedan previously offered. Volvo also now allows retailers to offer vehicles on their lots to subscription customers. Under the original program, subscription customers would have to order the car.
Gustafsson also said the company revamped its insurance structure, saying that was part of the "magic medicine" for success with the program.
Care by Volvo is live in 37 states that represent 85 percent of Volvo's volume, Gustafsson said. It will spread to eight additional states in March. Still, he noted, it wouldn't be "a big part" of Volvo's business.
"This is going to be one part of all the ways we sell cars in the U.S.," he said. "It's another tool in the portfolio to make more money."
