As per usual, US dealerships want their cut.
Car dealerships have tremendous power in the United States. Unlike almost any other product, new cars can only be purchased from authorized dealers, not from the manufacturers themselves. Tesla is one of the lone exceptions with its direct to consumer model, though it has difficulty in some US states. US dealerships have a knack for getting what they want - you know that dreaded 25-year limit on importing foreign vehicles? Blame dealerships for it.
Now, these dealerships are starting to feel threatened by new subscription services. This new model is being implemented by automakers like Cadillac, Lexus, Mercedes, Porsche, and Volvo at the corporate level, but Automotive News reports that the local dealers are feeling left out of the equation.
One of the first subscriptions to be revealed was Care by Volvo, which would allow users to subscribe to an XC40 starting at $600 per month including insurance and maintenance. The big issue here is that customers can sign up for subscriptions like Care by Volvo on a website or app without having to go through a dealership.
Some states are claiming that these services violate their dealer franchise laws and temporary bans have already been placed in Indiana and California. New Jersey dealerships are also seeking regulatory changes to ensure they aren't left out of the business stream.
Dealerships are feeling threatened because these subscription services offer an easy, no-haggle method for buying a car that could potentially hurt their revenue stream. Service like Care by Volvo currently work with local dealerships to deliver the car and compensate the dealership with a payment as well as any service performed at the dealership.
This seems like a fair process, but dealers are afraid that automakers could cut the compensation at any time. The whole issue is deeply complicated but we can boil it down to a simple theme - this is just another example of US dealerships trying to retain control and ensuring that the process of buying a new car continues to suck for everyone.