The Netflix for cars model hasn't worked out.
Several automakers have been testing the idea of a car subscription service where customers can subscribe to a lineup of vehicles rather than make payments on a single car. This allows subscribers to swap into a large vehicle like a 2021 Mercedes-Benz GLS when family members come to visit, then swap into a convertible for a fun weekend or a sedan for commuting to work.
Mercedes-Benz introduced its Collection subscription service back in 2018 that included a variety of AMG models in certain markets. The Collection pilot program was initially launched in Nashville and Philadelphia and has expanded into Atlanta but according to Automotive News, demand has been low and Mercedes will put the service on pause.
The pilot program was expected to last for two years and will end on-schedule this summer. "If the demand would have been unbelievable, then it could have gone further," said Mercedes-Benz USA Sales Chief Adam Chamberlain. "But demand was just ok, so we kept it." Several other automakers have already backed out of their subscription services citing issues reaching profitability. Mercedes Collection garnered a few hundred customers but the company has not stated publically if the service was ever profitable.
"One of the challenges of our brand is that the average age of our buyers is 55 years," Chamberlain said. "We wanted to see if the program would help bring in younger buyers, and it certainly did." Collection brought in buyers than were 10 years younger on average and 80 percent of them were new to the brand. "We've got a mountain of data now - it gives us some insights into how we can target that younger audience that clearly has a desire for the brand," Chamberlain added.
Pricing has been a major barrier for many of these subscription services. Mercedes Collection offered access to around 30 different model variants with maintenance and insurance included with four pricing tiers ranging from $1,095 to $3,595 per month.
"While consumers enjoy easy car ownership, there's a limit to how much they're willing to pay for it," Caldwell explained. "At the start, customers enjoy changing the car. After a certain period of time, that sort of gets old and they want to leave their car with their stuff in it."
"Covid-19 really will put the nail in the coffin, as the idea of swapping cars is off-putting to most consumers and likely unadvisable by health officials in this environment," Caldwell added.