A Subscription-Based Catastrophe Is What The Automotive Industry Will Look Like In The Future.

There Is A Good Chance That You Will Have To Pay A Subscription Fee On A Monthly Or Annual Basis In Order To Enjoy Luxuries Such As Heated Seats, Remote Start Key Fobs, And Other Creature Comforts.

As The Cost Of Producing Automobiles Continues To Rise And Profit Margins Continue To Contract, Automotive Manufacturers Are Devising Novel And Reprehensible Strategies To Extort Additional Funds From Their Clientele. The Most Recent Strategy For Making Money Off Of Customers Who Already Have All They Need In Their Cars Is To Provide Optional Add-Ons That Require A Monthly Fee, Such As Heated Seats Or Key Fobs With Remote Starters.

The Question That Needs To Be Answered Is Whether Or Not Clients Are Going To Roll Over And Play Dead.

At The Beginning Of This Week, A Number Of News Organizations Discovered That Bmw Was Offering Heated Seat Memberships For The Price Of $18 Per Month In A Variety Of Countries, One Of Which Was South Korea. The German Automaker Had Tried In The Past, But Was Unsuccessful, In Persuading Customers To Pay $80 Per Month For Access To Apple Carplay And Android Auto, Capabilities That Are Otherwise Provided For Free In The Vehicles Manufactured By Other Firms.

But Even After BMW Reversed Its Plan To Force Customers To Pay For Something That Was Previously Free, It Was Evident That It Wouldn’t Stop There. This Was Clear Even After BMW Reversed Its Decision.

Taking Into Account The Strong Opposition To It, This Is A Dangerous Trend.

Because cars now contain more computers and software than ever before, it is now feasible for manufacturers to add new features or patch flaws in real time using over-the-air software upgrades. This was not previously possible. These automakers have also gained access to new revenue streams as a result of this development.

Not just BMW, but also Volkswagen, Toyota, Audi, Cadillac, Porsche, and Tesla have experimented with subscription models for particular features and choices, such as driver-assist systems or speech recognition. BMW is not alone in this endeavor. The level of disapproval that it receives from the general population is cause for concern about this trend.

In the beginning of this year, Cox Automotive carried out a study with 217 individuals who have the intention of purchasing a new vehicle over the next two years. Only 25 percent of respondents indicated that they would be willing to pay a fee on a regular basis or once a year in order to unlock a feature in their vehicle. The remaining 75% of people responded with “piss off.”

The remaining 25 percent of respondents said they had no problem with subscriptions, and the features for which they would be willing to pay an annual or monthly fee generally fell into three categories: safety features such as lane-keep assist or automatic emergency braking (although automakers have agreed to make the latter standard in new vehicles starting this year); vehicle performance features such as extra torque or horsepower; and creature comforts such as heated or cooling seats or steering wheels.

According to Michelle Krebs of Cox, “automakers have work to do in order to accomplish their revenue objectives by charging consumers extra for features and services.”

AUTOMAKERS CAN’T REACH THEIR REVENUE GOALS BY CHARGING EXTRA FOR FEATURES AND SERVICES

The Majority Of Subscription Programs Appear To Be Coming Primarily From Luxury Manufacturers, Which Makes Sense Given That Their Customers Are Predominantly Wealthy And Are Able To More Readily Stomach A Yearly Or Monthly Price. However, Industry Observers Believe That Subscriptions Will Soon Be Available On Mass-Market Automobiles.

This Is Because Large Automakers Are Searching For New Revenue Streams To Help Support Their Hugely Expensive Plans To Develop Electrified, Connected, And Autonomous Vehicles.

General Motors Reported That It Earned More Than $2 Billion In Income From In-Car Subscription Services In The Previous Year, And The Corporation Anticipates That This Sum Will Climb To $25 Billion By The End Of The Decade. If This Were To Happen, General Motors Would Essentially Be Placed In The Same Category As Netflix, Spotify, And Peloton.

Approximately 16 Million Of Gm’s Vehicles Are Now Operating In The United States, And Approximately A Quarter Of Those Vehicles Incorporate Features For Which Consumers Pay Ongoing Subscription Fees.

During A Presentation At The Company’s Investor Event In December 2021, Alan Wexler, Svp Of Innovation And Growth At Gm, Stated That “Our Research Indicates That With The Right Mix Of Compelling Offerings, Customers Are Willing To Spend $135 Per Month On Average For Products And Services” (Our Research Indicates That If Customers Are Provided With The Right Mix Of Compelling Offerings, Customers Are Willing To Spend This Amount).

This Would Constitute A Massive Paradigm Change In The Manner In Which Automobiles Are Advertised And Sold. In Most Cases, A Car’s Factory-Installed Options Remain Unchanged Despite The Vehicle’s Age Or The Number Of Times It Has Been Purchased And Resold. This Holds True Even If The Vehicle Is Ten Years Old.

This Would Mean A Catastrophic Change In The Way That Vehicles Are Marketed And Sold In The World.

This Is No Longer The Case, Thanks In Large Part To The Rise In Popularity Of Tesla Vehicles And The Development Of Over-The-Air Software Updates In Recent Years. Following The Completion Of A Purchase, Customers Can Buy Access To A Wide Array Of Additional Services Offered By Elon Musk’s Firm, Which Was An Early Innovator In The Field Of Microtransactions.

It Even Used To Ship Automobiles With Battery Packs That Had A Software-Imposed Limit On Their Driving Range; Owners Had The Option Of Paying A Charge To Unlock The Full Capacity Of The Batteries. Experts Are Speculating That This May Actually Motivate Automakers To Release Further Software Upgrades To Assist Customers Keep Their Vehicles Up To Date After They Have Purchased Them.

On The Other Hand, The Notion That Automobile Manufacturers Will Restrain Their Worst Instincts Appears Foolish At First Glance.

There Was A Time When It Appeared As Though The Automobile Itself Will Become Part Of The Subscription Service. As An Alternative To Car Ownership Or Leasing, A Number Of Manufacturers Speculated That They Could Provide Customers With Access To A Selection Of Different Makes And Models In Exchange For A Monthly Fee.

It Seems That Consumers Were Not Interested In This Concept, As Evidenced By The Fact That Ford, Bmw, Cadillac, And Mercedes-Benz Have Terminated Their Respective Automobile Subscription Services. Other Businesses Are Still Working Hard, But Finding The Optimal Price Point Has Proven To Be Difficult. This May Appear To Be A Foregone Conclusion; Yet, It Is Not A Given, Particularly If Automobile Manufacturers Botch Their Sales Pitch.

Customers Are Basically Paying Businesses To Remove A Software Limitation On A Functionality That Already Exists When They Purchase Heated Seats Or Range-Limited Battery Packs. This Is Because These Features Already Exist. Some Clients May Be Convinced To Pay An Additional Cost For Services That Demand Consistent Software Upgrades, Such As Automated Traffic Alerts,

But This Is Not Guaranteed To Be The Case. Other Features, Like As Heated Steering Wheels Or Apple Carplay, Give The Impression That Automobile Manufacturers Are Attempting To Defraud Their Customers By Charging Them Multiple Times For Features That They Should Only Have To Pay For Once.

Sam Abuelsamid, Chief Analyst At Guidehouse Insights, An Industry Research Business, Said, “Automakers Obviously Want Customers To Get Used To This, But Frankly, I’m Skeptical This Will Fly.”

According To Abuelsamid, The Cost Of A Car Is More Than It Has Ever Been, With The Average Price Of A Vehicle Surpassing $48,000 For The Very First Time Ever This Month. It Is Anticipated That This Average Cost Would Increase Even Further As The Automotive Industry Shifts Toward The Production Of More Electric Vehicles. People Already Have The Impression That Dealers Are Putting Pressure On Them, Therefore It Is Quite Unlikely That They Will Support The Concept Of Paying Even More Money On A Recurrent Basis For Access To Particular Convenience Features.

Abuelsamid Believes That Buyers Won’t Be Able To Afford All Of The “Nickel And Diming” Unless Automakers Reduce The Price At Which New Vehicles May Be Purchased In Order To Balance The Cost Of The Subscriptions.

He Stated, “I Think Automakers Will Need To Back Down On Either Cost Or How Many Things They Want To Turn Into Subscriptions.” “I Think Automakers Will Have To Back Down,”

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