Subscription poker: Swapping an SUV for a sports car
Would you buy your dream car only to lease back it into a subscription scheme, in exchange for the option to often swap vehicles made by different manufacturers? That’s exactly what Jeep is trying to convince its customers to do.
Grand Cherokee! I can remember how, when we were young lads, we stared at the car of the coolest guy on the block, who all the local girls were eyeing with similar admiration that we felt for his ride. One of those girls was my older sister, who tried her hand at driving for the very first time in the dusty car park next to Lake Rakitna, behind the wheel of that Jeep, encouraged by our role model. In the f****** Grand Cherokee!
When we as boys talked about this feat in one of the treehouses, the only thing marring the admiration we felt was jealousy; but that can soon be a thing of the past for all the fans pining for an SUV of the Jeep brand. Jeep owners might just start voluntarily lending the legendary vehicles to pretty much anyone.
The automotive conglomerate, Fiat Chrysler, decided to embark on the path to the subscription economy. It started with two pilot projects in the American city of Boston. They’re both somewhat different from the attempts of other car manufacturers such as BMW, Porsche, or Volvo, who have so far opted to provide the option to swap different car models in exchange for a fixed monthly fee.
Jeep SUV owners will lend them to rent-a-car companies and in exchange they will be able to drive vehicles by other manufacturers.
Jeep's idea is a bit different. Initially, they invited two partners to the project – Avis Budget Group, one of the most important players in the rent-a-car industry, and Turo, which is a type of car sharing marketplace. Jeep will cooperate with each of them to test out a new business model, one from the field of the sharing economy, and the other from the subscription economy.
In the latter, Jeep and Avis will implement a three-month trial subscription scheme, as part of which, owners of Jeep brand SUVs will be able to rent their cars to Avis and Budget, and in exchange they will be able to use cars by other manufacturers, from the classic American sports car, Dodge Challenger, to Ram’s heavy pick-up beast.
Participants will be able to swap the cars six times in three months (the car delivery will be free for two of those) while their Jeeps, from the legendary Grand Cherokee to the Wrangler, will be used by the clients of Avis and Budget.
Jeep owners will be similarly included in the project with the startup, Turo, whose website offers 350,000 vehicles to rent, and which states that it can offer a solution for anyone who prefers to avoid the costs of owning a car.
Each of the pilot projects will initially include a hundred Jeep owners, and the success of these test runs will dictate if the projects might develop into a service in the future.
How much the subscribers would pay to use the service in either project is not yet known. According to Tim Kuniskis, the Head of Jeep Brand North America, setting the price is undoubtedly one of the biggest challenges, as difficult as figuring out the logistics.
This is another reason why both initial projects are so small. Each will include 100 Jeep owners, but in the future, the company is considering including car dealers that might have full parking lots of unsold vehicles, presenting an additional cost and a potential loss.
»We know all the pluses and minuses of subscription services, we’ve seen some challenges. Let’s step our toe in, let’s see if this is, No. 1, right for the brand. We’ll find out what’s good and what’s bad, what customers like and what they don’t like, and ultimately from that we’ll decide if we want to do this as something we promote to our dealerships at the time of sale«, Kuniskis said at this year’s Detroit motor show in an interview for Bloomberg, adding: »All these people who are casually going, ‘Is it for me or not for me?’, I can then get them as potential prospects to sell them a brand-new Wrangler.« Or a Grand Cherokee!