Mercedes-Benz is the latest automaker to launch a subscription service that gives customers access to a variety of cars for a single monthly fee. The service, called Mercedes-Benz Collection, launches in June as a pilot in Nashville and Philadelphia.
The Mercedes announcement did not offer any details on pricing, but did say that “multiple subscription tiers” will be available in each location, with a “broad array of Mercedes-Benz offerings including SUV, sedan, coupe, cabriolet, roadster, and wagon models,” as well as high-performance AMG models.
Customers will order cars though an app. Mercedes staff will deliver them at a location and time of the customers’ choosing. This will all be covered by a single monthly fee that bundles maintenance, insurance, and 24/7 roadside assistance, as well as unlimited mileage. Services like this offer drivers the flexibility to have a car when they need one, without having to deal with the hassles of ownership.
A subscription service lets Mercedes offer a more convenient experience for its customers but, perhaps more importantly, it ensures the German automaker can keep up with its rivals. Cadillac, Porsche, and Audi already offer their own subscription services. BMW recently launched its own subscription-service pilot in Nashville. Lincoln is expanding a service for lightly-used cars, which started as a pilot program in West Los Angeles and San Francisco in 2015.
In theory, subscription services could allow customers to bypass dealerships. But for now, both Mercedes and BMW are keeping their dealerships involved by having them take on some of the work of maintaining and delivering vehicles. If subscription services grow, more friction may occur between automakers and dealerships. Customers may not like them very much, but dealerships are an entrenched group in the car business, and they won’t disappear overnight.
As Mercedes and BMW compete with subscription-service pilots in Nashville, the two rivals will also collaborate on mobility services. Each automaker has run its own car-sharing service for years, but now the two companies are combining all of their mobility services in order to more effectively compete against tech companies. The initiative will include car sharing, ride sharing, parking, and electric-car charging. It’s yet another sign that the auto industry is changing.