Volvo readies subscription reboot to satisfy California

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The Volvo program has been a point of contention with the California New Car Dealers Association, which represents two dozen Volvo dealers. The group has argued that by offering subscriptions directly through its website, Volvo was violating state law meant to prohibit manufacturers from competing with their franchisees.

In January 2019, the association filed a petition with the state’s New Motor Vehicle Board arguing the legality of Care By Volvo. Last August, the board directed the Department of Motor Vehicles to investigate.

A six-month investigation by California’s Department of Motor Vehicles concluded earlier this year found that Volvo failed to properly notify dealers about changes to their franchise agreement related to the subscription program. It also concluded that Volvo provided inadequate lease disclosures to subscription customers.

In addition, the DMV found Volvo provided preferential treatment in allocating subscription vehicles to factory-controlled stores.

In a letter dated April 28, the department warned Volvo that future violations might lead to “enforcement actions” but stopped short of taking any punitive steps.

At a California New Motor Vehicle Board hearing on July 10, Volvo said it would halt the original version of the subscription service in California and work with the DMV and retailers to ensure the revised program does not violate state franchise laws.

Volvo did not say when the new subscription program will roll out in California.

Brian Maas, president of the California New Car Dealers Association, welcomed Volvo’s decision to discontinue the original version of the program there.

“It is critical that manufacturers abide by California franchise laws to continue protecting dealers and consumers,” Maas said. “Our dealer members support innovation. At the same time, the DMV findings and Volvo’s recent termination of the program further demonstrate that illegal behavior by manufacturers will not be tolerated.”

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Saurabh Shukla

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