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California dealers want Volvo to halt its vehicle subscription service

by Andrew Ganz

Dealers claim the service violates California law.

Vehicle subscription services have been hailed as the next big thing in the automotive industry, but the concept has gotten off to a rocky start. Cadillac has already suspended its Book by Cadillac subscription service, and now California dealers are calling on Volvo to halt its Care by Volvo subscription service.

The California New Car Dealers Association sent a letter to Volvo Cars North America late last month asking the company to immediately suspend its Care by Volvo subscription service in the state. The association, which represents 23 franchised Volvo dealers in the California, claims the subscription service is "directly competing" with dealers and also may "constitute illegal 'payment packing.'?"

Volvo dismissed the allegations.

"Care by Volvo has proven popular with consumers and has attracted new customers to the Volvo brand," Volvo said in a statement to Automotive News. "Volvo Car USA has always had an open and honest dialogue with its retail partners about Care by Volvo and has recently completed a 12-month anniversary review of the program. An updated version of Care by Volvo (2.0) was recently reviewed with the Volvo Retailer Advisory Board and the feedback was positive and in favor of the changes."

Care by Volvo is a two-year subscription service that allows customers to drive a Volvo vehicle for a flat monthly fee that ranges from $650 to $850, depending on the model. That fee also includes insurance and maintenance. At the end of the first year, the program allows subscribers to switch vehicles.

California dealers claim the subscription service is really just a lease, and that by including insurance Volvo is violating California law.

"California law expressly prohibits dealers from 'packing' the cost of insurance into the monthly lease payment," Brian Maas, president of the California association, said in the letter. "As such, CbV exposes Volvo dealers to liability under this (and other) consumer protection statutes."

Volvo says it will issue a response to the letter next week.