REX: Winning Bet for Mercedes Car Subscription Service

The German car maker expands their “Mercedes-Benz Collection” offer to additional American towns and reports encouraging results for this upmarket car subscription programme.

Mercedes-Benz Collection was first launched is Philadelphia in June 2018.
This service will now be available in Nashville and Atlanta.
This rollout can be accounted for by encouraging results in their first city of choice. According to Mercedes, these results actually exceeded their expectations.
Mercedes-Benz Collection:
- A car subscription service enabling customers to change vehicle based on their needs (SUVs, cabriolets, sedan, etc.),
- Three options are available (Signature, Reserve and Premier, based on the types of vehicles); In Atlanta, car drivers will be able to try a new Premium version of the offer, allowing them to access high-performance Mercedes-AMG models;
- High subscription fees apply: from $1,095 to $2,995/month, and $495 one-time activation fee per subscription;
- A concierge service has been added for vehicle exchanges. The offer also includes an insurance, assistance, as well as car maintenance. No mileage limits apply. A mobile app lets them manage their subscriptions.

KEY FIGURES

3 pilot towns

50 car models available

82% of the subscribers are new Mercedes-Benz customers

Stressing an upmarket positioning. Mercedes-Benz intends for Mercedes-Benz Collection to become the most flexible subscription service in the market for luxury cars. They clearly stand out, as rival car makers, including Volkswagen or Volvo, opted an intermediate positioning. In these cases the monthly fee remains high to make up for the cost incurred by manufacturers, but the offer is more limited and not as high-end.
Mercedes also stressed this strategy through the addition of AMG vehicles in the new version of their programme. Their results show that there actually is a demand for these kinds of subscription offers. Customers may, for instance, safely test a vehicle before buying it.
Commitment on a group scale. Mercedes-Benz highlights the key part played by their financial arm MBUSA as well as local car dealerships in contributing to making Mercedes-Benz Collection a success.
Acquiring new customers. Mercedes claims that their goal would be to attract younger customers, but doesn’t provide details as to their subscribers’ age distribution. Yet, they believe that Mercedes-Benz Collection fulfils its mission as a prospecting tool.

Mercedes-Benz is the first car maker reporting results on a car subscription service. Despite their clearly upmarket positioning, these positive results prove that there are customer expectations on this market, at least in the US.
In Atlanta, this subscription service relies on a partnership with car subscription technology specialist Clutch Technologies.
In the meantime, Cadillac also started featuring subscription offers again, but this time in Germany. A successful pilot phase was conducted in Munich. And the offer is scheduled to launch in Zurich this summer. Three subscription options are featured: CHF 2,100/month if ending the contract the first month; CHF 2,000/month for a 3-month membership and CHF 1,900/month with a 6-month engagement. Subscribers may choose from 7 different car models.

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