A curious trend has taken hold of the automotive community. Until recently, your only options with vehicle ownership were to purchase the car outright or to lease it from a dealership. But in a growing number of metropolitan areas, a third option is emerging: car subscriptions.
Volvo is the latest to start using a subscription model. At the Los Angeles Auto Show this week, the company announced that its upcoming XC40 compact SUV would start at a $600 per month subscription with a two-year contract. “Just like how you might buy a smartphone,” The Verge explains in its post about this news.
Which raises the question: Isn’t this just the same as leasing a car?
In some ways, yes—but not exactly. When you lease a car, you pay a monthly sum to rent that vehicle until your lease term expires. It can be a logical option when you don’t have the cash necessary for a hefty car down payment. A lease can allow you to drive a car you might not otherwise be able to afford. You, the driver, still have to handle getting your own auto insurance and maintaining the vehicle. It’s typically under warranty during the whole lease period.
Ford, Porsche, Cadillac, and now Volvo are among the carmakers giving drivers the option of a subscription. The biggest difference is the time frame: Rather than being tied to a years’ long lease, subscriptions give you the ability to “own” a car on a month-to-month basis. You could theoretically not have a car for 10 months of the year when you’re working and using public transit and then get a car subscription for two months when you’ll be traveling more often. These subscription plans include insurance, saving the time and headache of hunting for a policy yourself. Also unlike a lease: You may not have the option to buy your car at the end of your term.
“Car subscriptions” appear to be a clear bid to garner favor with tech-savvy millennials in busy metropolitan areas—a demographic that was erroneously pegged as avoiding car ownership (amid the myriad things millennials have killed). Most millennials, as it turns out, don’t always want to rely on Uber and public transit for their travel needs. Still, a subscription model—less commitment than a purchase, but more convenient than a car rental service like Zipcar—could fit the bill for…