Vehicle-based subscriptions are here.
Heated seats, audio system upgrades, and even performance boosts may soon cost consumers extra, but not as part of a one-time option or package upgrade. If certain automakers have their way, you’ll soon be charged a monthly fee to keep your backside warm, enhance your infotainment system, or enjoy extra horsepower thanks to a subscription plan.
Subscriptions…at a Cost
Yes, the world of subscriptions may soon expand, going beyond the connected services regularly charged today. Indeed, some manufacturers – especially luxury brands – are weighing assessing monthly or annual charges to cover services that once were offered for a one-time upgrade charge.
But consumers are having none of that, at least according to Autolist.com, a CarGurus company. Specifically, Autolist polled 1,200 car shoppers in February 2023 to gauge their thoughts about paying for features up front or subscribing to them. A whopping 69 percent said that they wouldn’t pay, with older consumers the most resistant. On the other hand, the youngest group of consumers were open to subscription plans, likely because they are long used to paying for gaming, meal plans, and sometimes clothing.
The Adoption Process
Even if consumers show interest in subscription plans, wholesale adoption won’t come easy.
“Brands that are hoping for a big revenue stream from a subscription model should note that it’s going to take time — and convincing — to get consumers on board,” said Corey Lydstone, president and CEO of Autolist. “Rushing into this approach too fast risks alienating a wide swath of car shoppers, particularly those that bring in the biggest profits.”
The customers who bring in the biggest profits are luxury car buyers. You can add full-size pickup truck and SUV consumers to the mix as these vehicles deliver some of the highest profit lines. While such shoppers routinely opt for many extras, continually paying for some features likely won’t sit well with them.
Indeed, BMW owners balked when the company attempted to charge them an $80 per year fee to use Apple CarPlay once a free trial period ended. Further, that fee was on top of the $300 BMW charged to install Apple CarPlay, a feature that is often standard equipment in far less costly mainstream models.
Possible Successful Models
Two automakers, though, seem intent on utilizing subscription services for their advanced technologies, namely autonomous driving. According to Consumer Reports, Tesla, for example, is charging for its “Full Self-Driving” beta, which is available as a subscription. Also, Cadillac will charge for its Super Cruise active driving assistance system after the no-cost trial ends. Both systems are cutting-edge and allow the respective manufacturers to demonstrate leadership in an emerging segment.
While most consumers want to pay upfront for their amenities, manufacturers are likely to find some interest among lower income and first-time buyers.
“New-car affordability is always a concern for younger buyers so offering features on a monthly or yearly basis could be a chance for carmakers to keep down the upfront price of a car,” Lydstone said. “As the owner’s income goes up while they own the car, they could then start paying for more features.” And with consumers holding onto their cars for more than 10 years on average, adding subscription features would allow them to personalize their rides and make upgrades without exchanging for a new vehicle.
Although subscriptions seem unpalatable to most, figure that manufacturers will develop plans that consumers are more likely to embrace. For instance, if electric vehicle owners gain additional power or extended range through a special upgrade, it may be worth the expense.
Canceling car feature subscriptions, though, should be just as easy to accomplish as terminating a Netflix account or abandoning a clothing subscription. If so, consumers may be willing to sample a feature that they otherwise wouldn’t consider, thereby increasing profits for manufacturers.
Analytics Team (2023, February 27). Survey: Consumers Hit the Brakes on Subscription-Based Features. Autolist.
Tucker, S. (2022, May 24). Average Age of Cars on Road Hits New High. Kelley Blue Book.
Barry, K. (2021, December 15). Why You Might Need to Subscribe to Get Certain Features on Your Next Car. Consumer Reports.