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Inside OEMs’ Embracement of Insurance

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April 13, 2018—A number of OEMs have recently rolled out subscription services, which allow customers the ability to drive a vehicle for a monthly fee and switch among available vehicles. The monthly fee includes scheduled maintenance, pick-up and delivery service, and—as it pertains to collision repair shops—car insurance.

Many OEMs in 2018 are following in the footsteps of Volvo, which announced a subscription package in December 2017.

This is notable for collision repair because, as noted in FenderBender’s April story on the future of shop-insurer relations, if insurance companies want to remain relevant, they’ll need to partner with OEMs as vehicles become more and more connected. For example, Esurance told FenderBender it is looking to secure OEM partnerships so it can be notified immediately of crashes and quickly initiate the claims process with body shops..

If insurance companies don’t form these partnerships, OEMs will take their own insurance divisions, likely in an effort to push collision work to dealerships.

Most OEMs’ subscription services cost around $600 per month—such is the case with the new Volvo XC40, for example, which will be part of the Care by Volvo subscription ownership service by this spring.

One software company and non-OEM subscription service, Flexdrive, partners with dealerships to offer customers a monthly subscription service.

Jose Puente, CEO and founder of Flexdrive, founded the company in 2014.  The service offers customers a month-by-month subscription, with price based on car model, car age and more factors. The service does not offer insurance.

“We’re building a recurring relationship with a dealership customer,” Puente said.

Flexdrive is not located in all U.S. cities but plans to be located in dealerships across 20 cities by the end of 2018. The service is currently in Atlanta, Georgia, Austin, Texas, Philadelphia. and New Jersey.  Before partnering with dealerships, the service offered a no-contract way for consumers to borrow cars.

Flexdrive started “onboarding” dealers into the business last year. Puente said he has seen a lot of subscription services get lumped into the subscription model when in actuality, they are a leasing program “in disguise”.

“If there’s credit and insurance in the mix then it’s not a subscription service, “ he said.

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