Mercedes-Benz reportedly pulls the plug on its subscription service after poor sales

Mercedes-Benz reportedly pulls the plug on its subscription service after poor sales

Mercedes-Benz is suspending its two-year-old subscription service after mediocre sales, Automotive News reports.

Mercedes-Benz USA head of sales Adam Chamberlain described the service as a learning experience that would have been expanded if sales were better. “If the demand would have been unbelievable, then it could have gone further,” Chamberlain told Automotive News last week. “But demand was just OK, so we kept it.”

Mercedes-Benz first rolled out its Collection subscription service in Atlanta in 2018 with the goal of appealing to customers who want to have access to a fleet of fancy cars but don’t necessarily want to own one. The program offered subscribers access to 30 models for a monthly fee, which included insurance, 24/7 roadside assistance, and vehicle maintenance.

“demand was just OK”

But Collection never expanded beyond the initial pilot cities of Philadelphia, Atlanta, and Nashville. The service drew a few hundred customers, and Mercedes executives had expected it to turn a profit in the first 12 to 18 months, Auto News reports. The pilot program will end July 31st, a spokesperson said.

“From the beginning, Mercedes-Benz Collection was designed to be a pilot program; an experiment for us to learn about the luxury automotive subscription marketplace and its customers,” Mercedes said in a statement. “After two years in operation, the pilot program has run its course and it is now time to sunset the MB Collection. The information and experience we’ve gained through the pilot about our customers and the subscription business model have been invaluable and may be applied for future initiatives.”

Mercedes’ Collection consisted of three tiers: Signature for $1,095 a month, Reserve for $1,595 a month, and Premiere for $2,995 a month. A one-time $495 joining fee is also required. As of February 2020, Mercedes was still trying to juice sales by adding a new tier consisting of the automaker’s high-performance AMG models.

But Mercedes isn’t walking away empty-handed. Chamberlain told Auto News that the automaker was able to collect “a mountain of data” on its subscribers, many of whom were, on average, 10 years younger than the automaker’s typical customers. This will help the car company’s better target millennial-aged car buyers in the future, he said.

Subscriptions have been a mixed bag for the auto industry. Ford walked away from its service last fall following low demand. Cadillac shut down its service Book in 2018, only to resurrect it several months later with fewer options.

Other automakers have had some success. BMW, Porsche, Audi, Volvo, Nissan, and Jaguar are still offering some variation of a subscription service. Even the big car rental companies, Hertz and Enterprise, are getting in on the action. Most of these subscriptions are only available in specific cities and are still in the pilot phase.

Update June 29th, 11:41AM ET: Updated to include a statement from Mercedes-Benz.

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