Volvo Cars recently announced the discontinuation of its car-sharing service, Volvo On Demand, marking the end of what had been billed as the company’s high-profile adventure to revolutionize car sharing. Originally envisioned as the automotive equivalent of popular streaming services like Spotify, this initiative took off with great hope but quickly ended up losing billions, making it unsustainable. The decision affects around 50 employees who will lose their jobs as the company scales back its operations amid challenging market conditions.
Launched under the name Sunfleet back in 1998, the car-sharing service evolved through several rebrandings before becoming known as Volvo On Demand. Despite its impressive fleet of approximately 1,200 vehicles and 200,000 registered users, Volvo's car-sharing service failed to turn a profit from the very outset. “Despite various attempts to increase the usage and visibility of our service, the financial data simply doesn’t add up,” declared Jessica Span, head of Volvo Cars Sweden, during her recent discussions with the media.
According to Volvo's announcement, the primary reason for discontinuing Volvo On Demand lies in the increasing operational costs coupled with the expectations of service quality both from the company and its users. "This decision is taken considering the more challenging macroeconomic environment which has resulted in increased costs to operate the service at the quality Volvo Cars demands,” the company stated.
Until the service is finally shut down, current customers will still be able to use it up until January 13, 2025. After this point, all subscriptions—including those with prepaid plans—will be automatically canceled, leaving users seeking alternative options for vehicle sharing.
The end of Volvo On Demand is particularly telling about the shifts within the automotive industry, where companies are racing to innovate and adapt to the growing demand for shared mobility services. While some initiatives have found success, many similar services have faced challenges. For example, competitors such as Aimo, Car2go, and Drivenow also have shuttered their operations due to financial constraints, illustrating the broader industry struggles.
The car-sharing market has seen its share of ups and downs, battling with factors such as changing consumer preferences, the high maintenance costs of vehicle fleets, and the quest for sustainability. The situation with Volvo On Demand can be indicative of the difficulties faced by other companies exploring the growing arena of Mobility as a Service (MaaS). Established ride-sharing platforms maintain customer loyalty through their vast networks and convenience, making it even harder for newcomers to penetrate this competitive segment.
The loss of Volvo On Demand will force potential users to explore alternate car-sharing options, such as Kinto Share, Hyre, or Lynk & Co, which have managed to carve out niches within this challenging market. Although the car market's dynamics are shifting, consumers still expect high-quality service, prompting companies to innovate more than ever.
Volvo Car's senior management acknowledged the harsh realities of the venture gone awry, recognizing the valiant efforts of their teams and the talent now facing redundancy. "Of course, it's tough to break the news to those affected, who have dedicated much effort to making the service work," remarked Span, empathizing with the soon-to-be jobless employees. This move to close the car-sharing service follows closely from their previously announced discontinuation of another brand service, Care by Volvo, just two months prior.
Despite the disappointing end to this ambitious project, Volvo Cars continues to make significant strides elsewhere, particularly with its electric vehicle offerings. The company has recently noted substantial increases—160% to be specific—in the sales of electric cars, reflecting the growing consumer shift toward sustainable transportation. This commitment to electrification offers something positive amid the setbacks faced with their car-sharing service.
Scaling back on loss-making ventures such as Volvo On Demand might pave the way for re-invested efforts focusing on sectors where the brand is thriving, redefining its approach as it adapts to current economic realities. The evolution of consumer behavior and expectations remains central to its strategy moving forward.
Volvo's discontinuation of its car-sharing initiative signals more than just financial loss; it encapsulates the broader challenges faced by traditional automotive brands trying to navigate the fast-evolving demands of modern mobility. While the dream of creating the next big thing might have faded away, it remains to be seen how Volvo will pivot strategically to maintain its competitive edge and consumer appeal.
