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I'm looking for input from anyone who has knowledge of how the subscription plan and process works and also analysis of my own debate on whether it is "worth it".
Care by Volvo XC40 Subscription Link
I am working on the economics of the Care by Volvo Concierge subscription program and have just today, January 14, 2018, put the $500 refundable deposit and ordered my wife's Amazon Blue XC40 Momentum.
Here is a link to the vehicle build.
The confirmation screen stated the car would arrive in April - May 2018.
I have ordered the XC40 Momentum with an MSRP of about $41,445 excluding 6% PA tax.
Benefits of the subscription:
A well-appointed XC40 with many of the most popular Packages: Premium, Vision, Heated Front Seats/Heated Steering Wheel. Options: Panoramic Roof, 19" 5-Spoke Black Diamond Cut Alloy Wheels.
The vehicle will always be less than 2 years old which keeps up with advancements in technology and assumed reliability.
Maintenance, wear and tear items like brakes and a tire/rim warranty are included.
Insurance is included in the monthly subscription. Roughly $80 value per month.
Up to $1000 in excess wear included ie: Scratches, dents, interior wear.
15,000 miles per year (She only averaged 10,000 per year over the past 12 years)
You don't own the car after all the payments. Limited customization.
Questions I have about the plan:
Is it possible to do a slight modification to the included order that I would pay for? Wife really wants the White roof and mirror caps for $300.
If I want to buy the car at the end of the subscription, what is the cost?
How does the insurance work? Who is covered? My wife and I are in our 50's with clean driving records but we have an 18-year-old son, who has a clean record, but "he's 18" He would not be the primary driver and there are several other vehicles in the household.
How is the $600 subscription taxed? Is it like a lease payment taxed at 8% in PA? This is important to help calculate the actual monthly cost to own.
Here is my comparison as to the cost of ownership/subscription.
In the past, we would by a car and own it for 10 years. Payments for the car would stop after 5 years of financing, but insurance, extended warranty costs and maintenance like tires, brakes and repairs would continue to accrue. With the subscription, assuming you stayed on it for the 10 years, these would all be included.
Assumptions: Years 3-10 Volvo will offer a plan that is comparable to the $600 plan now being offered.
If I bought outright and financed at 2.89% I would be paying about $750 per month for 60 months, add to that an extended warranty with low deductable for years 3-8 for $4000 (?) insurance of $80 per month($9680) and 2 sets of tires and 7 years oil changes, brakes and repairs ($8700 total). At the end you have a 10 year old vehicle worth $2000(?)
$63,380 -- 10-year Total cost of ownership buying (car payments/insurance/ext warranty/repairs and maint) Am I forgetting anything?
$72,600 -- 10 year Total Subscription cost (120x $600)
Subscription costs $9,220 more ($77 per month)
I have rationalized this $77 per month overage with the fact you always have a very new car and the benefits of that. Also, the flexibility to switch this car out after 1 year or 2. This being the first model year of a new platform, there may be quirks that are worked out in year 2 or 3 of the platform. Also, I believe this is a very transitional period in the auto market, with the advent of electric cars and self driving technology, the cars may advance faster than they have in previous decades. Also, if buying, there would be no warranty for years 8-10 based on my model.
There may be tax advantages that I may be able to utilize, but I need to talk to my accountant.
I am planning on returning to this thread with updates on how the process plays out in the coming weeks and months.
Volvo has already charged my credit card for the $500 and will apply this to the first $600 payment. This is a refundable deposit that can be refunded if we never enter into a subscription contract.
-- There was an error when submitting my credit card info on the subscription sign up website. After submitting my Credit card number It went to a blank screen stating "An error has occured" in text at the top of the page so I went back over the process and submitted a second and third time. Still errored. I tried my wife's credit card on the same Citibank Visa account and got the same error... Sure enough, minutes later, I received 2 confirmation emails with order numbers. So I will have to cancel one of the orders when support reopens on Monday.
I have received a confirmation email for the subscription which included these 3 messages.
Our Volvo Concierge will guide you through the process and will be in touch soon. (Within 7 days)
30 days prior to your vehicle delivery, we will contact you via email providing a secure link to Volvo Car Financial Services to submit your online credit application.
-- Insurance enrollment
30 days prior to your vehicle delivery, we will contact you via email providing a link to Liberty Mutual to complete your insurance enrollment and obtain your insurance certificate.