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GM bets consumers will "subscribe" to Cadillac

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Latest MoneyWatch headlines 01:10

General Motors’ (GM) Cadillac business is putting a new spin on the idea of car sharing that has been around in the U.S. for more than a decade.

The luxury car brand plans to test market a $1,500 per month subscription service in the New York City area starting on Feb.1 that will provide consumers access to a Cadillac of their choice whenever they want it.

Dubbed “BOOK by Cadillac,” its members will be able to pick a vehicle through an app without worrying about auto loan or lease payments, insurance premiums and costs for routine maintenance. A concierge service will deliver the Cadillac at a location and time the customer specifies, with no mileage limits.

GM plans to roll out BOOK by Cadillac in other markets, though it hasn’t released a schedule for that yet. Membership will be offered on a month-to-month basis with no long-term commitments. 

Keyless car-sharing 02:28

Like other automakers, GM is looking at new ways to sell cars to consumers, particularly younger ones, many of whom aren’t even bothering to get a driver’s license. The Center for Automotive Research noted that the percentage of licensed drivers aged 16 to 44 as part of the overall population has been in continuous decline since the 1980s.

The U.S. car-sharing market currently is dominated by Avis Budget Group’s (CAR) Zipcar, Mercedes parent Daimler’s car2go and Enterprise CarShare. Unlike the GM service, these focus on more budget-conscious consumers in need of no-frills transportation. 

But now luxury brands are starting to kick the tires as car-sharing memberships are expected to surge to 3 million in 2021, nearly double the 2014 level of 1.6 million.

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BMW launched a service called ReachNow last year after an earlier effort flopped. car2go is available in a handful of U.S. cities, offering Daimler’s fuel-efficient Smart car for $84.99 per day.   

“All these services have been launched in the last one to two years,” said Adela Spulber, transportation system analyst at the Center for Automotive Research. “The market is far from being saturated.”

The center estimates that it costs an average of about $9,500 a year to operate an SUV in the U.S., almost half the price of BOOK by Cadillac, which may limit its appeal. However, existing car-share services charge for each use, which the GM brand doesn’t do.

“This is obviously a service for very wealthy customers,” she said.

The automaker expects BOOK by Cadillac to attract first-time buyers to the brand who may eventually either buy or lease one of the vehicles, according to Cadillac spokesman Eneuri Acosta.

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