Car options on subscription
The new way of funding optional extras
Hot on the streets
BMW announced that vehicle owners will have the option to access heated seats via a subscription. The car maker has clarified that it overs certain “premium features”. Meanwhile, Tesla have announced that their SatNav system will be based on a similar subscription service moving forward.
BMW are offering services through it’s ConnectedDrive suite. If a shopper purchases a vehicle with heated seats in the UK, shoppers can pay around £15 per month, roughly £150 per year or a flat fee for unlimited provision.
The official website states: With the growing range of BMW ConnectedDrive Upgrades*, you can equip your BMW with new vehicle functions exactly when you need them. For example, would you like to add Driving Assistant Plus to your BMW iX or BMW 7 Series at a later date? The steering wheel heating in the BMW 2 Series Active Tourer? Then you can do this quickly and easily over the air via the ConnectedDrive Store – if you wish, even for a term of between one month and three years.
The statement comes after a previous attempt by the automaker to set up a subscription model: In 2019, BMW asked vehicle owners to pay an annual fee or a fee for 20 years to access Apple CarPlay connectivity, but it pulled back on the decision following customer backlash.
Feature function futures
The subscription model for vehicle features isn’t a novel concept. Several automakers that offer self-driving capabilities have already employed the strategy.
Is there a market?
A US J.D. Power survey that looked at consumer satisfaction with manufacturer apps supports the sentiment. According to the survey, car owners are wary of paying to subscribe: 90% of respondents currently don’t pay for the vehicle app, 28% say they are willing to pay up to $5, while 58% report they would not be willing to pay at all. The most common reported frustrations included connectivity issues and slow speed.
Recouping and restructuring
What is clear is that in a highly competitive market place. With the huge investments in EV technology, manufacturers are wanting to improve and update their financing models. Subscription services are the currency of the modern consumer. It’s appealing no to have to pay upfront, but retain the option to add later and temporarily. After all, who needs heated seats in the summer?
It seems inevitable that subscription options will become the road ahead for vehicles. Last year, General Motors said it earned over $2 billion in in-car subscription service revenue, a number the company expects to grow to $25 billion by the end of the decade. That would essentially put GM in the same league as Netflix, Spotify, and Peloton.
The question is whether the initial purchase costs will reflect this. After all, it used to be included in the initial price but now, stealth like, it heralds extra costs. Convenience, it seems, comes at a price.