Several dealerships Automotive News spoke with about their experience with subscription services said depreciation, fleet management and insurance costs drove them to revamp or outright end their programs:
- Jeff Wyler Automotive Family shut down its Wyler FastLane subscription service after a year.
- Prime Motor Group's Prime Flip program closed in December after operating for a year and a half.
- Warren Henry Automotive Group last month wound down its FlexWheels initiative that started in 2017.
- The website for Lou Fusz Automotive Network's Fusz Select subscription service, announced in August 2018, appears to have been shut down.
- FlipAuto, run by Benzel-Busch, a luxury dealership group in Englewood, N.J., has this message on its website: "We apologize but this car subscription program is currently on hold and we are not accepting new customers at this time."
Wyler Group, with 15 rooftops, launched FastLane in January 2018, quickly reaching 70 subscribers, primarily driving new vehicles.
But Kevin Frye, marketing director for the Milford, Ohio-based group, said that adding scale didn't improve the economics and actually increased the depreciation risk. So the group opted to call it off.
"This was a fantastic consumer experience," Frye said. "From a business side, it just didn't make sense."
He declined to say whether FastLane had been profitable.
While subscriptions provide a novel way to package payments, they aren't a radical innovation, said Mike Ramsey, senior director at Gartner.
"The driver is paying to use the car for a limited period of time — shorter than a lease," he said. "That's basically a rental."
And what gets rented out is important.
Jim Butler Auto's driveBLACKTIE doesn't use any new vehicles in its fleet of about 70 vehicles, and it keeps certified or nearly new vehicles in the program for only 90 days. Only two vehicles couldn't be sold for a profit after being used in subscriptions, said Brad Sowers, president of the six-rooftop group in Fenton, Mo.
"It's actually been surprisingly successful," he said.
The fleet strategy has been a key to success, Sowers said, as has allowing only participants with a safe driving record and charging enough for the service.
He's broadening his offering, giving customers the option to drive just one vehicle — instead of being able to swap autos — in exchange for a lower price. He partners with Ally to floorplan vehicles and with Aon for insurance.
"For our first year, we were cash-flow positive and we had profits," he said of the program, which launched in fall 2018 and has almost 60 subscribers. "It's all come down to inventory management. That's the bottom line."