Home Connected Car Ford Wants to Sell You a Mileage Plan Instead of New Car

Ford Wants to Sell You a Mileage Plan Instead of New Car

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Ford’s Canvas vehicle subscription service offers the benefits of owning a car without the long-term commitment.

Buying a new car is a long-term financial commitment and a bad investment. The value drops as soon as you drive it off the lot. You use it only part of the time and may pay to park when its idle. You’re required by law to buy auto insurance and pay for registration no matter how much or little you drive.

But knowing this, most Americans still want to own their own car, no matter the cost. The car industry, after all, recently posted record sales, and at a time when people have more mobility options than ever.

But while ride-sharing services like Uber and car-sharing services like Zipcar provide relatively affordable short-term transportation alternatives, they don’t offer the convenience of your own set of wheels. That’s why several automakers are experimenting with subscription services that give customers the benefits of car ownership without any long-term expense or commitment.

But current vehicle subscription services are from luxury brands and their plans are pricey. Book by Cadillac runs $1,800 a month; Porsche Passport, which lets you choose among 22 of the German brand’s models, is $3,000 a month. The Care by Volvo plan that recently launched with the Swedish automaker’s new XC40 subcompact crossover costs $600 or $700 a month, depending on the vehicle trim.

Now Ford is the first to aim for the meat of the market with a startup called Canvas, a subsidiary of its Ford Motor Credit vehicle financing arm. It not only offers a low all-inclusive price but models the program after a smartphone data plan.

Rollover Miles May Vary

Canvas packages begin at $375 a month for a Fiesta compact and go up to $685 for a full-size Explorer SUV, with vehicles ranging from a C-Max Hybrid to an F-150 pickup in between. The monthly price includes comprehensive insurance, maintenance, registration, a warranty, and roadside assistance.

Ford Canvas vehicle subscriptions

Plans start at 500 miles a month and go up to 850 miles/month for $30 more, 1,250 miles/month for $60 more, and unlimited mileage for $90. As with a data plan, unused mileage is rolled over to the next month, and you can change plans mid-month and return the car with seven days’ notice.

Canvas says on its website that the longer you stay in a car the lower the price goes, since “it means less work for us and that’s a savings we want to pass along.” A car that costs $429 a month would go down to $398 a month for six months and $359 a month over a year, for example.

For now, the program is only available in the Bay Area and West Los Angeles, and Canvas has only about 600 customers. While this is small potatoes for one of the world’s largest automakers, Canvas fits with Ford’s growing Smart Mobility subsidiary that’s developing alternative methods of getting around, such as Chariot, and the automaker expects to expand the program and also learn from it.

“As car ownership evolves, we see Canvas as part of our suite of products that address changing customer needs in mobility,” Ford Credit EVP of marketing and sales David McClelland said in a statement. “Canvas is building subscription products that are relevant to consumers today, and it’s building technology for the future, including billing and fleet management, with a nimble approach to product development.”

McClelland told Forbes that Canvas is “all about flexibility – multiple cars, multiple customers, variable term, variable payment. This is how we stay relevant in the world,” he added.

 How an automaker can keep making money on cars when people eventually decide that buying a new vehicle is a long-term financial burden and owning a car is only part of a larger mobility puzzle.

Doug Newcomb

BY DOUG NEWCOMB – COLUMNIST

 Doug Newcomb is a recognized expert on the subject of car technology within the auto industry and among the automotive and general media, and a frequent speaker at automotive and consumer electronics industry events. Doug began his career in 1988 at the car stereo trade publication Mobile Electronics, before serving as editor of the leading consumer magazines covering the topic, Car Audio and Electronics and Car Stereo Review/Mobile Entertainment/Road & Track Road Gear, from 1989 to 2005. In 2005 Doug started his own company, Newcomb Communications & Consulting, to provide content to such outlets as Road & TrackPopular Mechanics, MSN Autos, SEMA News, and many others. In 2008, he … MORE »

 

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