Mercedes-Benz Starts Subscription Pilot From $1,095 a Month

(Bloomberg) -- Daimler AG’s Mercedes-Benz is starting a car-subscription pilot in two U.S. cities, joining brands from Jeep to Porsche in testing alternatives to traditional vehicle ownership.

The app-based service initially available to drivers in Nashville and Philadelphia has three pricing tiers ranging from $1,095 to $2,995 a month, according to a company statement. Subscribers will get access to 30 different models, from C-Class sedans to GLE sport utility vehicles, and can swap cars as often as they like, depending on what tier they choose.

Mercedes is joining a pack of automakers looking to appeal to younger customers by offering access to cars through service more analogous to how Netflix Inc. sells movies or Uber Technologies Inc. dispatches rides. It’s also challenging its biggest German rival head-on: BMW AG launched a subscription pilot -- also in Nashville -- in April that charges as much as $3,700 a month. Just last week, Fiat Chrysler Automobiles NV announced it would launch a service starting in 2019 with its Jeep brand.

“Our pilot is first and foremost a conquesting tool and a way to attract incremental customers interested in the Mercedes-Benz brand,” said Craig Walters, senior manager of mobility services. “It was obviously something that was becoming more ingrained in what our customers wanted, not just in the automotive space but other spaces as well.”

Mercedes chose Nashville for the subscription service, dubbed Mercedes-Benz Collection, because it has high job growth, a lot of young, affluent buyers and high-performing dealers, Walters said. The cross-town competition with BMW was just a coincidence, he said.

To get started, customers download the app, take a photo of their driver’s license and enter credit card information for the $495 activation fee. Subscribers can choose any vehicle within their tier with no mileage limitations. The monthly fee covers insurance, vehicle maintenance and 24-hour roadside assistance.

The pilot is 18 months long and Mercedes will assess next steps early next year, Walters said.

Clutch Technologies LLC, which sells analytics software to predict which models will be in demand based on factors such as past customer behavior and weather conditions, is providing the tech for the subscription service. Clutch also works with BMW and with Volkswagen AG’s Porsche, which started an app-based pilot in Atlanta last year after General Motors Co.’s Cadillac introduced its service in January 2017.

©2018 Bloomberg L.P.