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BMW Launches its Subscription Car Service in Tennessee

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【Summary】BMW touts its vehicles as “the ultimate driving machine” and now the company hopes to become the ultimate car subscription provider as well. BMW officially launched today its car subscription service at a dealership in Nashville, Tenn.

Eric Walz    Apr 04, 2018 4:15 PM PT
BMW Launches its Subscription Car Service in Tennessee

NASHVILLE, TN — BMW touts its vehicles as "the ultimate driving machine" and now the company hopes to become the ultimate car subscription provider as well. BMW officially launched it car subscription service at a dealership in Nashville, Tenn. The service, called Access by BMW, allows customers to drive the BMW of their choice, and switch the model out anytime during the month for another one.

With a subscription-based model, drivers can rent a BMW X5 SUV for a weekend getaway, or a convertible model for an upcoming summer road trip. The subscription service is a flexible way to drive a BMW and it's a new business model for automakers.

The cars can be summoned directly through the Access by BMW smartphone app. Vehicles are then delivered by a concierge fully fueled and ready to go, with the member's personal preferences (e.g. radio stations) already preset.

BMW is joining the list of automakers, including Volvo, that are exploring vehicle subscription services and will launch its first U.S. pilot program this week at a Sonic Automotive store in Nashville.

Customers can sign up for the app-based service beginning on Wednesday, and vehicle deliveries will start the first week of May. Atlanta-based Clutch Technologies is providing the application, and Sonic Automotive's BMW of Nashville will manage the vehicle fleet, providing maintenance and delivery service to its subscribers.

While there is no set timing, the Nashville pilot will be a longer-term test, said Ian Smith, CEO of BMW Group Financial Services USA and Region Americas.

"This is part of developing a sustainable business model," Smith told Automotive News in an interview. "There are many business models over the last couple of years we've seen emerge into the marketplace and even some memberships programs. We'll see whether they'll be successful or not. We want to make sure that whatever we do here is absolutely viable."

The experiment was spurred in part by increasing interest from consumers in vehicle options that go beyond a long-term, fixed-rate contract, Smith said.

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BMW's subscription model is pricey compared to a traditional car lease. Access by BMW is targeted at affluent customers willing to pay higher monthly fees for two tiers of service starting at $2,000 for the Legend level. That includes an array of vehicles including the 4-series coupe and convertible, M2, X5 and 5-series sedan, including a plug-in hybrid variant.

The optional M tier costs $3,700 and includes BMW's high-performance models such as the M4 convertible, M5 sedan, M6 convertible, X5M and X6M. Additional price tiers, including one costing less than $2,000 is expected to be added later, Smith said.

The prices are all-inclusive and include vehicle maintenance, insurance and roadside assistance. There is no limit to how often subscribers can switch vehicles within a given month, and the term is open ended. Customers can sign up for as little as a single month. There are no mileage limitations for the vehicles.

"That's what we're really excited about: From a consumer perspective, as soon as you put on any conditions, you create a barrier to entry," Smith said. "As we scale it out and grow it out and we learn from it, we'll see where that takes us. But right now, it's a completely open platform."

Dealer involvement is key to the trial. BMW of Nashville will be paid a set fee for each service it provides, such as customer delivery or vehicle detailing. He declined to provide examples of those fees. The dealership will also get the first chance to retail a vehicle removed from the subscription fleet.

Sonic and BMW have been developing the pilot for about six months, said Jeff Dyke, Sonic executive vice president of operations. The Nashville store is one of over 100 dealerships that Sonic operates in the U.S.

Sonic has been studying subscription plans for about two years. Dyke foresees subscription programs to be a growing opportunity.

"We look at it as another avenue to provide our guests with an experience they're beginning to request," Dyke said. "Our brand is not just about selling cars. It's about providing the guest an experience they can't get anywhere else, and we think this is just an absolutely perfect fit into our guest experience platform."

With the launch of Access, BMW joins brands such as Cadillac, Porsche and Volvo that are experimenting with subscription plans. BMW's chief rival Mercedes-Benz intends to launch its own subscription service in two U.S. cities in June, while Volvo launched its ‘Care by Volvo' subscription service in the U.S. this month, which starts at $600 per month for the Volvo XC40.

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