California Dealers File Complaint Against Volvo
Care by Volvo is a service provided by Volvo Cars USA that allows you to lease certain Volvo cars monthly with insurance and maintenance included, with a 15,000-mile-per-year cap for two years. After 12 months you can switch to a different Volvo. With a $500 deposit, monthly payments average between $700-800 for the two years of the lease. Volvo began the subscription service in the spring of 2018.
Now a dealership trade group has filed a complaint with California’s Department of Motor Vehicles citing it violates provisions of state franchise and consumer protection laws in the California Vehicle Code, according to Automotive News.
On August 15 the California New Motor Vehicle Board directed the DMV to start an investigation of Care by Volvo. The investigation will conclude with its findings in a written report in six months. Depending on the results of the investigation there could be disciplinary action against Volvo Cars.
“Volvo Competes With Dealers”
The dealers who filed the complaint say that Care by Volvo sets up a competition directly between Volvo and its dealers by essentially telling potential customers to bypass the dealers and lease directly through Volvo. They also say that Volvo never informed the dealers about the lease program, that it favors dealers who participate in Care by Volvo with more desirable cars, and that it undermines dealer restrictions against payment packing. Additionally, they accuse Volvo of hiding the true costs of the cars and services while taking deposits directly from customers then leaving the paperwork and assorted drive-off responsibilities to the dealers without compensation.
In a statement from Volvo, they say, “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. 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.”
“Don’t Buy Our Cars”
At the 2018 Los Angeles Auto Show Volvo displayed no cars, but instead, they promoted Care by Volvo with banners and advertising with slogans like “Don’t Buy Our Cars,” and “Subscribe Don’t Buy.” The dealers contend that while the service is “clever” it is nonetheless “illegal and a marketing ploy.”
The dealers say Volvo is “going around their franchisee partners in an attempt to retail vehicles directly” to customers bypassing their dealers. In a statement Brian Mass, president of the California New Cars Dealership Association said, “Franchise laws exist to protect dealers from this type of behavior. Our dealers support innovation, including subscription-based models, but we are against violating the law.”
Volvo started the Care by Volvo service with the launch of the XC40 crossover at the 2017 LA Auto Show. Volvo said that it sold a year’s worth of subscriptions in just four months and that it caused a bottleneck in the availability of the XC40. It was so successful that they soon offered the service for the XC90, XC60, S60 and V60 crossover.