Volvo Car USA's vehicle subscription plan is running into growing criticism from some retailers, who view the program as an end-run by the automaker around the franchise network.
The California New Car Dealers Association, which represents 23 Volvo dealers, filed a petition Jan. 15 with California's New Motor Vehicle Board, arguing the Care By Volvo subscription program violates state law meant to prohibit manufacturers from competing with their franchisees. The group wants the Department of Motor Vehicles to investigate Volvo's subscription program and have it halted.
Dealers in other states are considering following California's lead and pushing back against Care By Volvo.
Illinois Volvo dealers have written to Volvo executives to register their concerns with the subscription program, said Pete Sander, president of the Illinois Automobile Dealers Association.
Dealers there feel the Care by Volvo program potentially conflicts with their franchise agreements and the Illinois Motor Vehicle Franchise Act.
"It looks like the manufacturer is trying to compete with its own franchised dealers," Sander said.
Volvo Car USA CEO Anders Gustafsson is likely to discuss the disagreement with dealers during Volvo's make meeting Saturday.
Volvo Retail Advisory Board Chairman Matthew Haiken is concerned that dealer unrest with the subscription program is escalating.
"With California opening it up, now other states are going to jump on the bandwagon and it's going to make it that much more challenging" for Volvo to launch a revised version of the program, said Haiken, dealer principal of Prestige Auto Group in East Hanover, N.J.
Volvo executives meet with dealers at the NADA Show on Saturday.
Care by Volvo launched in 2017 as a two-year subscription service that offers the XC40 crossover and S60 sedan. The use of a vehicle, insurance and maintenance costs are rolled into a monthly payment. After a year, subscribers can swap for a different vehicle.
"I believe we need to be innovative and try new things, but I am 100 percent for the manufacturers following state laws, and they should be held accountable," Haiken said.
Brian Maas, president of the California New Car Dealers Association, said that Care By Volvo shuts out dealers, prohibiting them from communicating with subscribers. Consumers sign up for Care by Volvo online or through the Volvo app, and a Volvo concierge coordinates with a local dealer for vehicle delivery.
Haiken said dealers want to be involved in the subscription process. "If the customer wants to subscribe to a vehicle, then let us navigate those waters with them," he said. "Let the customers come into our store. Let us educate them on their options."
