California DMV to investigate Care by Volvo subscription program

The California Department of Motor Vehicles is launching an investigation of Volvo’s Care by Volvo subscription program after a dealership trade group lodged four complaints that the service violates provisions of state franchise and consumer protection laws under the California Vehicle Code.

The state’s New Motor Vehicle Board voted unanimously on Aug. 15 to direct the DMV to investigate Care by Volvo and issue a written report on its findings within 180 days. If any violations are found, it could result in disciplinary action against the automaker’s DMV license.

The California New Car Dealers Association argues that Care by Volvo creates competition between Volvo and dealers by encouraging customers to bypass franchises altogether. It also alleges that the program failed to give written notice to the franchisees about the program; unfairly allots highly sought-after vehicles to preferred Care by Volvo-participating dealers at the expense of non-participating dealers; and seeks to undermine prohibitions against payment packing by concealing the actual costs of the Volvo vehicle and bundled services, taking customer deposits directly and leaving dealers responsible for filing all the DMV paperwork.

In a legal petition filed earlier this year, the dealers group cited the 2018 Los Angeles Auto Show, where Volvo displayed no vehicles but instead displayed electronic banners that read “Subscribe, Don’t Buy” and “Don’t Buy Our Cars.” It alleges that characterizing Care by Volvo as a subscription service “is a clever, but illegal, marketing ploy.”

“This is just the first step in ensuring that manufacturers, specifically Volvo, stop going around their franchisee business partners in an attempt to retail vehicles directly,” Brian Maas, president of the California New Cars Dealers Association, said in a statement. “Franchise laws exist to protect dealers from this type of behavior.

“Our dealer members support innovation, including subscription-based models, but we are against violating the law.”

Autoblog unsuccessfully sought comment from Volvo. The company told Automotive News it has changed Care by Volvo since getting feedback from dealers.

“Volvo Car USA is committed to developing Care by Volvo in collaboration with our retailers to offer the flexibility of subscription side-by-side with traditional lease and financing,” the company said in a statement. “We continue to improve the program, which will soon enable retailers to complete subscription purchases and provide instant vehicle delivery. Volvo Car USA believes the addition of a subscription option on the sales floor will benefit both customers and retailers.” 

Volvo announced its Care by Volvo subscription service at the 2017 L.A. Auto Show, tying it to the spring 2018 launch of the XC40, and it later said it sold a projected year’s worth of subscriptions in just the first four months of the service being offered, creating bottleneck in supply of the XC40 crossover. The program now includes access to the XC90, XC60, S60 sedan and V60 Cross Country as well.

Care by Volvo monthly payments vary between $700 and $800 for 24 months, not including a $500 deposit. It includes the ability to switch to a different model after 12 months, with insurance, maintenance and a 15,000-mile-per-year cap all included.

For more information on Vehicle Subscription Services, check out Autoblog’s Complete Guide.