By Courtney Becker
WWR Article Summary (tl;dr) Car exchange programs – enabling customers to switch cars – represent a growing trend across luxury brands.
Imagine driving to the beach in a convertible. Picking up the kids after school in an SUV. And then going to a business dinner in a smart sedan. All over the course of one month.
Mercedes-Benz has launched such a pilot program in Philadelphia, allowing customers to switch from among four models a month.
The subscription service, Mercedes-Benz Collection, which starts at $1,595 a month, began this week when the car maker started taking applications over the program’s website. The service is being tested in Philadelphia and Nashville, Tenn. through 2019, giving customers access to sample more vehicles in the fleet.
Some Mercedes-Benz customers “have very much an appetite” for trying out several different cars, and the input from Philadelphia will shape the service moving forward, said Donna Boland, manager of corporate communications at Mercedes-Benz. “There has always been a strong demand and affinity for Mercedes products in this market.”
Car exchange programs – enabling customers to switch cars – represent a growing trend across luxury brands. Mercedes-Benz competitor BMW is piloting its Access by BMW service in Nashville, Porsche Passport has been a fixture in Atlanta since October, and Book by Cadillac – which launched in New York City in January 2017 – expanded to Los Angeles and Dallas in November.
“Customers are already becoming acclimated to the idea of temporary ownership,” said Ivan Drury, a senior analyst at Edmunds.com, a car shopping and research site. “Combine that with the way our lives are being restructured with so many things on a monthly basis, that makes sense.”
The ability to change vehicles without negotiation or hassle should appeal to a niche audience, particularly those who tend to lease cars rather than buy, he said.
Consumers are “just getting degrees of this right now,” with the various exchange programs companies are testing.
“The idea really is that every vehicle is considered a ride-share” in the future, he said.
But with its emphasis on luxury cars, stiff prices, and required driving background checks, this service is “not going to appeal to everyone,” Drury said. “If you own a pickup and you need that pickup, or you have a spotty driving history, this might not be for you.”
Mercedes’ “Reserve” level in Philadelphia costs $1,595 per month, or about $50 a day, and customers can choose from among 11 vehicles and make up to four exchanges each month.
The “Premier” option at $2,995 a month, or nearly $100 a day, offers 21 models with an unlimited number of swaps.
Those prices exclude tax and a $495 registration cost, and the subscriptions come with a Mercedes-Benz Collection insurance policy, roadside assistance and a personal concierge service that delivers the new car and collects the old one.
The service will be offered by Mercedes-Benz of Fort Washington and Euro Motorcars of Devon, the company said.
Those in the area interested in ownership rather than an exchange system, but who like the idea of simpler car shopping, can already use Care by Volvo, which rolled out nationally in November. Although operating on a subscription basis, this offering differs from exchanges in that it locks customers in with one car for two years, giving them the chance to switch packages after the first year.
Jim Nichols, technology and product communications manager at Volvo, said this option differs from a lease by bundling the different aspects of purchasing and owning a vehicle.
The company “found customers were overwhelmed by the purchasing process and ownership process,” Nichols said. That prompted Volvo to simplify the process by offering only two body types in their packages and partnering with Liberty Mutual to offer insurance.
The two packages now available are a XC40 Momentum subscription at $600 a month, or $20 a day, and a XC40 R-Design subscription for $700 each month, or about $23 a day.
Subscription options that offer insurance will cater more “towards a younger demographic, because they’re not going to have all these things established.” Edmunds’ Drury said.
Boland acknowledged that some consumers would prefer stable ownership, but said “it totally depends on your lifestyle and needs.”
Mercedes, she said, also wants to see what works in the market.
“Our goal would be of course at some point to roll this out more broadly, but in order to do that we have to test the waters,” she said.