Calif. to Probe Volvo Subscription Service

California’s Dept. of Motor Vehicles is investigating whether Volvo Car Corp.’s 2-year-old vehicle subscription program violates state franchise laws.

The California New Car Dealers (CNCD) Assn. claims Volvo illegally modified its franchise agreements to allow it to directly compete with dealers. Volvo launched the plan—which enables customers to pay a flat fee to cover routine maintenance, insurance and access to multiple models—in the state in late 2017.

The group, which filed a formal petition in January, presented its arguments during a public hearing last week. DMV has been ordered to report on its assessment within 180 days.

The investigation will review if Volvo properly notified franchisees of the subscription plan, whether the program diverts customers from dealers to the carmaker and whether certain dealers are allocated vehicles on a preferential basis. DMV also will evaluate whether Care by Volvo “undermines” California laws that prohibit dealers from “packing” the cost of insurance into a monthly lease payment.

Volvo says it already has made changes to the program after receiving dealer input. Additional changes, such as allowing dealers to complete subscription purchases and deliver vehicles, also are in the works, according to the carmaker.

CNCD represents about 1,200 dealerships, including more than 20 Volvo retailers.