Cadillac cancels its $ 1,800 car subscription service a month

The subscription plan, launched early last year, allows members to exchange different Cadillac models for a monthly fee, thus providing an alternative to customers who may not wish to be s & # 39; 39; long-term commitment in the purchase or lease of a car.

A spokesman for GM confirmed the end of the service but said that he could restart later. "We press the pause button for a brief moment to make some changes to the book. [by Cadillac] based on our learning, "said the spokesperson.

Some aspects of the Cadillac program proved to be more expensive than expected, said people familiar with the program. Problems with the back-end technology used to support the service have made some customer service functions cumbersome and tedious, adding additional costs to the company, said these people.

Over the past year, many automakers have introduced subscription programs. People who bet are interested in handling personal transportation like a Netflix account.

Automotive industry executives fear that the century-old model of customers buying and repairing their own cars is losing ground to mobile phone services, such as Uber Technologies Inc., and other means of transport. Many automakers are partnering with technology startups to launch new smartphone-based applications offering customers new travel options, such as car-free calls in the future.

Cadillac was one of the first brands to offer a subscription plan. Since its launch in March 2017,

Porsche
AG

Mercedes-Benz from Daimler AG,

Volvo

AB and other high-end brands followed Cadillac's initiative by launching similar programs allowing subscribers to offer different models at monthly rates.

This decision came as GM reduced costs as a result of slower sales in two of its largest markets, China and the United States. The Detroit automaker has sent out this week 's purchase offers to more than a third of its 50,000 employees in North America. as the economy and the automotive market remain strong, the company said.

The car subscription model is still in its infancy and many brands are now limiting this service to a few cities and dozens of subscribers.

Hyundai engine
Co.

has recently discontinued its subscription service for electric cars, but has announced plans to reintroduce a reorganized version.

"The hype surrounding subscriptions as the next big wave of motorizations has not yet occurred," said Ivan Drury, senior analyst at Edmunds.com's automotive website.

The Cadillac subscription service allows customers to pay monthly with no long-term commitment. They can order cars via their smartphone and exchange models up to 18 times a year. We could not know how many subscribers had been registered by Cadillac.

Analysts say it can be difficult to manage regular customer rotations. The logistics of repairing damaged cars, cleaning them between uses and delivering them within 24 hours is tedious and expensive, say analysts and operators.

As part of its subscription, Cadillac also offers other services, such as the deposit of home vehicles, which are difficult to obtain on a larger scale, Drury said.

"Some of these services will even transfer your car business from your phone's charger to your child's stroller," Drury said. "The problems posed to offer this level of service on a large scale are vast."

Subscriptions generally allow subscribers to change vehicles several times a month and can range from $ 650 to more than $ 3,000 per month, depending on the manufacturer. Most plans include insurance and the company takes care of repairs and routine maintenance, such as garbage.

The Mercedes-Benz MB Collection program, for example, offers a dozen models. Monthly rates range from $ 1,095 to $ 2,995.

However, in most cases, consumers pay thousands of dollars more over the long term to subscribe to the service that they rented a car, according to Edmunds.

For example, renting a Cadillac Escalade SUV for three years would cost about $ 49,000, according to Edmunds. The cost of Cadillac Book subscriptions during this period would be $ 64,000, the company said.

Start-ups offer subscriptions for members to access automotive brand vehicles, including Atlanta-based Clutch Technologies, acquired in August by private firm Cox Automotive Inc., which sells services to dealers.

Some dealer groups have also begun to offer a subscription service. A service called Flexdrive is jointly owned by Cox and Holman Automotive, a large dealer group based in New Jersey.

Write to Mike Colias at [email protected]