Mercedes-Benz is learning how difficult car subscription services can be. Automotive News reports (via The Verge) that Mercedes has halted its Collection subscription pilot after modest uptake. The company had hoped to expand the drive-what-you-want service if demand had surged, but the interest was “just OK,” according to sales chief Adam Chamberlain. He didn’t say how profitable Collection was, but it only ever reached Atlanta, Nashville and Philadelphia.
The offering was supposed to draw in younger buyers (Mercedes’ average US buying age is 55) who were enticed by the tri-star brand, but didn’t the burdens and limitations of ownership. You could hop from a sedan to an SUV on demand with full insurance, maintenance and roadside help. In that way, it succeeded — Chamberlain noted that the average subscriber was closer to 45.
There were problems, though. Chamberlain noted that the novelty of switching cars became a hassle for some customers as they were tired of constantly switching personal items between cars. The service could easily become too costly to run without frequent swaps. Companies may need to offer cars as short-term rentals and loaners for this to make sense.
This doesn’t mean the trial run was a waste. The company has a “mountain of data” that could help it tailor sales and services to a younger crowd, Chamberlain said. However, it does suggest that car subscriptions aren’t guaranteed to be hits. It may depend on having a brand where car swaps make more sense, like Porsche, or following a Volvo-style single vehicle approach.