SACRAMENTO, Calif. — The California New Car Dealers Association has warned Volvo that the factory’s vehicle-subscription program could be in violation of several state laws and called for an immediate halt statewide. CNCDA President Brian Maas outlined the association’s concerns with “Care by Volvo” in a letter addressed to Volvo Cars USA CEO Anders Gustafsson.
“In light of the understandable concerns of our Volvo dealer members, we ask that you immediately suspend the CbV program in California and work with your dealer partners to design a subscription program that strengthens your relationship with dealers and complies with California law,” Maas wrote, in part, requesting a response by Dec. 21.
In the letter, Maas accuses the factory of competing with its dealers and illegally modifying their franchise agreements in violation of the California Vehicle Code, reducing franchisees to “acting as an agent of the manufacturer.” Maas notes that the program launched this year with “little involvement” from regulators or dealers.
Perhaps most urgently, the CNCDA contends that the subscription program — which the association describes as a 24-month lease — relies on “price manipulation” to ensure every customer pays the same price for the service. That practice could be an ongoing violation of the section of the CVC that prohibits payment packing.
“CbV adjusts the price of the vehicle to compensate for the variable cost of insurance,” Maas writes, noting that the flat, monthly cost of the program includes insurance, maintenance, and excess wear-and-tear protection, among other benefits. “As a result, a customer with a clean driving record and low risk profile will effectively pay more for a vehicle than a customer that is more costly to insure.”
Gustafsson responded with a written statement shared by the factory with F&I and Showroom and other media outlets.
“Care by Volvo has proven popular with consumers and has attracted new customers to the Volvo brand,” Gustafsson wrote. “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.”
This story was updated to include Volvo’s response.
Originally posted on F&I and Showroom