General Motors to Shut Down Cadillac Subscription Service by Yearend

General Motors Co. is reportedly hitting the pause button on its vehicle-subscription service, Book by Cadillac after launching nearly two years ago in Los Angeles, Dallas, and New York.

A GM spokesman confirmed the OEM plans to shut down the service by yearend, the Wall Street Journal reported. However, there is still a chance that the subscription service could make a comeback. “We are hitting the pause button for a brief time to make some tweaks to Book [by Cadillac] based on our learnings,” the spokesman said.

The OEM is notifying subscribers — who are currently paying $1,800 a month for the service — that they have 30 days from the time they are told to turn in their vehicles.

Though the exact reasons behind GM’s halt on its luxury subscription service are not known, the shutdown could reduce the hype around subscription services.

As long as direct-to-consumer leases or indirect leases are available to consumers, then that’s a more financially viable transaction than a subscription lease, Jim Houston, senior director of auto finance at J.D. Power, told Auto Finance News. “It’s the cost,” Houston added. “A [consumer] can lease a Cadillac for significantly less than $1,800 a month.”

However, Cadillac’s high subscription prices could be a move to offset residual values, said Larry Dixon, senior director of valuation services at J.D. Power. “Maybe Cadillac didn’t adequately prepare for the residual hit when [subscription] options are three months or six months, and the OEM is used to dealing with an average [term] of 36 months.”

The trend of luxury subscription programs started to take off at the beginning of last year, and GM was a trailblazer with the launch of its Book by Cadillac service in January 2017.

The Porsche Passport and Mercedes-Benz Collection programs followed suit, starting at or near $1,600 per month and ranging as high as $3,000 per month. There is also Access by BMW, which recently cut prices to $1,100 per month due to consumer demand.

Toyota Finance ServicesLexus Complete Lease program, slated to launch in the first quarter of 2019, is the captive’s take on a short-term lease option for consumers. The 24-month, 20,000-mile limit program would bundle lease payment, car insurance, and maintenance coverage.

Nissan Motor Acceptance Corp. has plans in the works to offer consumers a subscription service if that’s where the market continues to shift, company President Kevin Cullum previously told AFN.

While Cullum doesn’t believe subscriptions will have a substantial impact for another “20 to 25 years,” NMAC will join other OEM subscription services exploring the field, including Ford Motor Co., Hyundai Motor Co., and Volvo Cars.

“It comes down to getting money for the used vehicle,” Samuel Ellis, principal consultant for Auto Experience, told AFN. “These programs are just going to struggle until they can make the economics work. The discussion needs to center around, ‘What needs to be innovated?’ Describing [a lease] different doesn’t necessarily make it better.”

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