California DMV will probe Care by Volvo subscription service for possible violations
Dealers have four claims against the automaker's fledgling service.
Care by Volvo helped bring the idea of automotive subscription programs into the spotlight, packaging together a number of costs, including insurance and maintenance, into a single monthly payment. While the public might enjoy that simplicity, it appears that not everybody is on board with these schemes.
Automotive News reports that the California Department of Motor Vehicles will investigate Care by Volvo, the automaker's vehicle subscription service. The California New Car Dealers Association first asked the automaker to halt its service in 2018, citing alleged regulations violations, and it followed that request with a petition to the DMV's New Motor Vehicle Board in early 2019. That board voted unanimously last week to follow through with an investigation.
The investigation will look at four different claims that Care by Volvo is in violation of parts of the state's vehicle code. The first claim alleges that Care by Volvo diverts customers away from dealers and toward the automaker itself. The second claims that the automaker failed to properly inform dealers and the state board about the subscription service. The third allegation levied at Volvo involves preferential allocation of vehicles and sales to specific dealerships.
The fourth claim is the one that had dealers asking Volvo to shutter its program in 2018. This alleges that Care by Volvo constitutes "payment packing," which stems from the idea that Care by Volvo's single-price structure (including insurance) fiddles with numbers to make high-risk and low-risk buyers pay the same amount in the program. The dealer association's letter claims that Care by Volvo is a lease product, not anything different, and is thus in violation of California law.
Neither Volvo nor the California DMV immediately returned requests for comment. At the time of the original cease-and-desist request, Volvo said in a statement that it had reviewed its program and run an updated version of Care by Volvo past the Volvo Retailer Advisory Board, which had given positive feedback. Volvo provided AN with a statement saying the automaker believed the program has benefits for both owners and dealers.
It will likely be some time before any results are publicized. According to AN's report, the New Motor Vehicle Board has requested the DMV return with results within 180 days, so this fracas could stretch well into 2020. Considering the maximum length of a Care by Volvo subscription is 24 months, early adopters could very well be on their second car by that time.
