Volvo plays a novel subs option with its new C40 Recharge
Riding on the back of a 43% posted increase in year-on-year UK market sales, highlights Iain Robertson, has made Volvo Cars exceptionally bullish about its future prospects but he wonders about the sheer affordability of its proposition.
Enduring a pandemic has led to a multitude of alternative business launches, even though employment in several areas of enterprise may have suffered from income starvation and severe cuts. Both arts and entertainment, which might be as well to include cafes, pubs, dining establishments and the burgeoning hospitality industry, are victims of a series of lockdowns and the need to be socially distant. In a nation that no longer leads the world in major manufacturing and is heavily reliant on its service industries, the fall out is considerable.
Even for those people being supported by our government’s multi-billion Pound rescue programme will be subjected to increased taxation over coming years, let alone settling loans, even as the much-vaunted success of the vaccination programme makes its impact felt and we emerge hopefully from the current malaise. Whatever happens in the near future is always going to be tinged with avoiding a recurrence of various Covid strains and enduring a two to three decades recovery period. As scientists warned us from the outset, it is a ‘whole new world’.
One of the key industry sectors is transport, which itself is entering a period of major directional shift. With a perceived need to reduce pollution levels but a more pressing demand to slash the consumption of non-renewable natural resources (coal, gas, oil), it is facing the stark reality of addressing major change, within the next 8.5 years.
While the obvious route is via electrification, ensuring that the power consumption is going to be sustainable and not as heavily reliant on fossil-fuelled power stations, as it is at present, is a responsibility of major proportions. Yet, on the current timeline, the 1st of January 2030, from when the sales of petrol, diesel and gas-powered motor vehicles will be banned, is rushing into consciousness, with greater speed than a Japanese bullet train can muster. However, the demand involves all transport sectors, rail, marine and air, not just new car and light commercial vehicle sales.
The growing and understandably vocal electrification industry may well be avoiding some inconvenient truths, not the least of which places into serious question the resourcing of enough sustainable energy to feed itself. Remember, we are talking about changes that will have a worldwide impact, as severe as that of the pandemic, even though some nations appear to be more reluctant than others to jump onto the electrified bandwagon.
Although the EV scene is projecting a ‘free-for-all’ image, supported by a premise of lower overall running costs, buying into it requires a 30% to 40% per unit premium over the internal combustion engine alternative, which is not at all affordable for consumers keeping a judicious eye on their personal spending power. Some inventive rethinking of finance options is going to be essential, if future production targets are to be met. There are some pioneering enterprises, such as Wagonex, that offers a car subscription service, with which ownership is not even a consideration.
While not the first of the carmakers to propose it, Volvo is in the vanguard of those prepared to qualify rental, rather than outright acquisition. At the same time that it is launching its all-new C40 Recharge model, for which it boasts a 261mls fully charged range, it has also prioritised its retailing model, which means that the car can be ordered online, from the comfort of a customer’s domestic abode. For many exponents of vehicle retailing over the past several months, online activities have sustained their businesses.
Of course, Volvo will sell you a new C40 Recharge for a cool £57,985, taking a modest £500 deposit with full settlement due prior to delivery in early-2022. It is fortunate that the carmaker does not produce an equivalent petrol, or diesel, variant, as it would highlight only too clearly the hefty and ironic charge being made for going Volvo electric. However, as a current (sic.) XC40 model (its closest relative) in basic, front-wheel drive form is listed at £25,855 and even a top-spec, R-Design Pro T5 plug-in hybrid version is listed at £43,095, a near-£15,000 additional cost does make the all-electric C40 Recharge look conspicuously over-priced.
However, the subscription option may well possess a flexible appeal that outright purchase cannot. For a start, you can choose from a 36 month fixed price deal at £729 per month, which equates to £26,244 spread over the three-year term, although you do not own the car and you will be restricted to an annual mileage limit of just 6,000mls. Bumping up the annual mileage to 8,000 will cost a further £15/month (£540 total full-term); 10,000mls will be £30/month extra (£1,080); 12,000mls is £40/month extra (£1,440). For the business requiring some mileage leeway, up to 24,000mls annually will add £220/month (£7,920) To be fair, these rates include all servicing, wear and tear cover and future road tax, leaving just insurance to find.
On the other hand, a three-month subscription is available on the C40 Recharge for even greater flexibility. A 30-day trial period is offered that is not available for the three-year term customers. However, the car can be changed, or cancelled, with 30 days’ notice, for £879/month, a £150 per month premium over the longer-term subscription. If Volvo can get away with its highway robbery, as a result of consumer compliance (or fear), it will deserve it.
On the face of the subscription offer, if the consumer can justify a monthly car on-cost of almost £800, even with mileage restrictions, the C40 Recharge will secure several deals. For the business user, the greatest attraction will be the fixed price payments, with their associated taxation benefits. Yet, leasing the car independently in a competitive market may offer the best option overall.
