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California dealers ask Volvo to stop Care by Volvo subscription service

The dealers allege it constitutes "payment packing," which is illegal in California.

2019 Volvo XC40
Steven Ewing/Roadshow

Care by Volvo, the automaker's quasi-leasing option for a subscription-happy population, has had its share of growing pains in the program's first year and change. But now, a new threat from California new-car dealers could potentially derail the program in the Golden State.

The California New Car Dealers Association has asked Volvo to cease operation of Care by Volvo in California, Automotive News reports, citing a letter sent from CNCDA's president to the head of Volvo Cars of North America, Anders Gustafsson. The letter alleges that Care by Volvo is in violation of California laws.

According to AN, CNCDA President Brian Maas asserts that Care by Volvo amounts to the automaker "directly competing" with dealers, and that the automaker has "illegally modified its franchise agreements."

Furthermore, Maas says Care by Volvo violates "payment packing" laws, stemming from the notion that the program's single-price-for-everyone structure fiddles with the numbers in the background to ensure both high-risk and low-risk drivers pay the same amount, regardless of actual insurance costs. "California law expressly prohibits dealers from 'packing' the cost of insurance into the monthly lease payment," the letter reads, according to AN. "As such, [Care by Volvo] exposes Volvo dealers to liability under this (and other) consumer protection statutes." This argument is based on Maas' claim that Care by Volvo is actually a lease product and not something different.

Volvo has been very proud of Care by Volvo so far, but it appears that at least some dealers are hoping for a bigger piece of that pie.

Steven Ewing/Roadshow

Representatives for the California New Car Dealers Association did not immediately return Roadshow's request for comment. Volvo sent Roadshow a prepared statement from Mr. Gustafsson: "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." The automaker told AN that it has a formal response to the CNCDA that it will send out next week.

Volvo told Roadshow at the LA Auto Show that the revamped Care by Volvo would start with a new interface, focusing on better serving those on mobile devices. Eventually, the company would like to offer its entire lineup via Care by Volvo, something that could be made possible after this update. It would eventually like to expand to used cars, too.

The majority of the Care by Volvo experience doesn't involve a dealership. However, owners will have to pick their car up at (and eventually return it to) a dealership, and the program's paid service will be performed at dealerships, as well. Dealers are paid for each subscription they handle. Care by Volvo proved so popular at its outset that its entire US allocation of XC40 SUVs sold out in just four months.

Volvo XC40: See what all the hubbub is about.

Volvo S60: Looking for something a little bigger? Care by Volvo works with the S60, too.