[RahulNagaraj]

Multiple carmakers across the globe have started to introduce monthly & annual subscription fees for various in-car features, services & upgrades. However, according to a new study, 75% of car buyers are unwilling to pay the extra subscription fee and feel many of these features & services should be part of the vehicle's initial purchase price.



Three-quarters of the consumers who took part in the survey stated that they would be unwilling to pay extra for various in-car features & upgrades while buying a new car. Consumers expect the initial cost of the cars to include the features and services. Consumers overwhelmingly voted for safety & comfort features such as lane-keep assist, automatic emergency braking, remote start & heated and cooled seats to be part of the purchase price and not have to pay extra.

However, they were willing to exclude a few features and services like in-vehicle Wifi and vehicle tracking from the standard list and be part of a subscription plan.

The 25% of the consumers who were willing to enter a subscription by paying extra had features & services in three categories: safety, vehicle performance & creature comforts. 80% were willing to pay an additional $30 - $35 per month for most of the safety features. Around 39% said they were willing to pay a monthly fee of $20 - $25 for vehicle performance, while only a few were willing to pay extra for personalised creature comfort features.

Source: Cox Automotive

Link to Team-BHP news

[Turbo yoda]

I'm surprised 25% said they would pay subscriptions.
Isn't it morally wrong for a car company to switch off safety features which the car is fitted to behind with, simply because the customer isn't paying subscriptions

[warrioraks]

Has any other industry even tried this? Makes no sense to selectively enable hardware which is already installed on the car. I dread the day when these things are thrusted down our throats in the name of cutting edge technology and innovation

[subie_socal]

I really don't mind paying for the creature comforts, given they prove to be useful. But they should leave the safety features, untouched. Manufacturers should not mint money from you for enhancing your safety while travelling.

[buzzy_boy]

Originally Posted by Turbo yoda

I'm surprised 25% said they would pay subscriptions.
Isn't it morally wrong for a car company to switch off safety features which the car is fitted to behind with, simply because the customer isn't paying subscriptions

Well, it's actually 80% out of the 25% (=20%) who were originally okay to pay the subscription fee. I agree that it is still a large number.

Subscribing for safety features may not sound as outlandish as it initially seems.

1. For instance, the technology has the potential to make advanced safety features available at a lower upfront cost. Who knows, that could've been the reason why the 20% were willing to pay a subscription fee.
2. People can subscribe to the features when they really need them. For example, people who drive mostly within the city can subscribe to lane keep assist only when they take a rare Highway trip.

However, the ethical question is, where would the car companies stop? For example, would they switch off the airbags if i don't pay for the subscription fee?

The point to note is this: personal transport is longer a lucrative business due to regulatory requirements related to safety and climate change. Hence, car manufacturers are looking for ways to increase their revenue stream. Car ownership is headed into a complicated future, that's for sure

[sunbaj]

The way things are progressing I foresee that a day will soon come that the car would not charge or move to drive mode unless you pay a monthly subscription to the manufacturer. It would be like your personal ola/uber.

[rockporiom]

This does make me think though that there would be a huge market for hacking/jailbreaking cars just like what was done with Playstations, iphone's, etc. There are already coding tools like carly/OBDEleven that can enable features that are otherwise disabled based on region. I would imagine car manufacturers would have thought of this and established a connection to the car with LTE to ensure compliance and any kinds of modifications would void the warranty but again that was the same case with jailbreaking a playstation or iphone, only thing needed was to not update the phone or not connect the playstation to the playstation network. Wherever there is a paywall people find a way to circumvent it.

Many manufacturers are also testing the waters and understanding customer feedback, Toyota recently tried charging from remote start and received massive backlash from customers and quickly reverted their decision for all cars that didn't need data services to have remote start. BMW also tried doing this with Apple carplay and ultimately had to end up reversing this decision and also ended up offering android auto without a subscription on all their newer cars.

[prajwalmr62]

What is the need to pay to buy something as a subscription which has a fixed, upfront cost? One shouldn't get charged for using ventilated seats on monthly basis, especially when the cost is fixed and can be included in the up-front cost.

The other cases, example of Lane Keep Assist, can be charged monthly, if there are timely updates. Or best case scenario, charge the users for yearly feature updates. You need latest LKA? pay x amount and we'll get it updated to latest one. Makes sense for end users too.

Subscription on a car does not make sense unless it is tied directly to the usage. Charge the users for the 30km stretch they used LKA. But of course, this doesn't help the car manufacturers because this $$ is going to be less.

My advise for car companies is this - XaaS models do not work for the products which have no frequent iterations. So, implement this on your cars at your own peril.

[rajk15]

A way these OEMs charge (justify the charge) is the money they have to pay to keep the internet in your car working. As I'd said in the earlier thread: Reducing connected car tech costs by using your own data plan OEMs should not charge consumers atleast for the internet. My wild guess is this might even work in the budget (<20L segment). Almost the entire tech industry is shifting from hardware to software since once you sell the hardware the customer need not come back to you for a long time (same reason why light bulbs' quality was reduced a while after their invention since they weren't required to be changed this reducing demand and subsequently profits); software is the new cash cow (or even OIL).
Sadly so, people will accept it and move on. Nobody stopped buying iPhones or Galaxy Ultra series because of the omission of chargers. Heck this menace has even crept into the budget segment with phones like the Galaxy F32 5G.
When the Tata Punch was launched, it was called overpriced. Today, it is the top 10 selling cars and is even recommend quite extensively on the forum itself.

The future is certainly costlier maybe even so much so that the common man's standard of living will drop.

[Gildarts]

Remote start, heating/cooling starts, etc., are features that require specific expensive hardware to be built into the vehicle and the hardware costs would be added in the vehicle costs during purchase. So if a customer does not opt for these subscriptions, then how is the price paid for the hardware justifiable? may be the manufacturer should payback the customers in monthly installments for all additional costs incurred by the customer.

[charanreddy]

Talk of being penny wise and pound foolish !

A car is a high ticket, aspirational purchase. It’s not like your phone or laptop or TV. These sort of activities will drive customers away and force them to think whether the car price is justified in the first place.

A parallel example from my work : We tried reducing fees on a credit card product and expected customers to be happy and more engaged. We were taken aback when we saw customers returning their credit cards and using less as a result of charging less fees. On further deep dive and research we realised that customers didn’t realise the fees were so high in the first place and in the process of reducing the fee we had reminded them of the same !!

Car customers are not used to calculating the individual cost of parts or services in a car. I.e. a customer wanting to buy a BMW X3 or a Creta will not calculate what extra they are getting in the X3 and how much value / price can be attributed to it. Most of the time It’s a feel good purchase. By introducing them to services / subscription based model , you are just reminding them of how less transparent the base price of the car is !

[derick]

This is a new business model being adopted in every sector, it first started with video streaming services like netflix where companies can make a regular flow of income even after selling a product, its a classic money making tool. A smart tv needs subscription, an xbox needs xbox gamepass and a live gold subscription, any purification device for water or air needs regular service or changing of parts. The automotive industry is joining the bandwagon to increase its profits even though service centers are already meant to do the same. Its no surprise very soon a lot of things will be subscription based.

[Jeroen]

Selling software features to enable functions on existing hardware platforms is nothing new. We have been doing that in the Telecom industry for the last three decades. Similar in Industrial automation. Aviation too. The customer pays for what they need, feel might be useful etc.

It is a a newer concept to the consumer space. But even there it has been introduced in some shape or format already. If you’re into photography you know you can, to some extend, pick and choose certain parts of Adobe photo editing software.

On my hobby OBD analyser I pay a separate fee for each brand of car I want to work on.

Even on your internet provider there could be different fees for different packages, in terms of speed, capacity, what TV channels you want to watch, what movies to watch etc.

It’s not new to the car industry, although we might not have recognised as such. For the better part of two decades, some manufacturers offer different engine powers in the same car. It’s not a different engine, just a different parameter setting on your ECU! I recall many years ago I had a Volvo S60. These are usually one off payments, when you purchase the car, but the principle and how it works technically is identical.

So what you see happening in the consumer space is a move from one offs, to subscription based. Manufacturers like subscription. Steady income. Also, software development is usually part of R&D activities. In most financial systems the cost of R &D gets treated very differently compared to the regular cost of sales/delivery.

So selling software features is interesting from a bookkeeping point of view. The R&D cost has been taken in the past, might be amortised. There is very little cost involved to deliver a software feature. so selling software as one off, better yet as a subscription, adds tremendously to gross margins of companies!

Jeroen

[livetodrive]

Next gen car is equivalent to current gen phone. But compared to phone, where hardware is mostly centralized and services can be enabled or disabled per customer through software, the challenge remains for car manufacturers that every customers hardware needs to be same to come up with a cost effective subscription plan.

A better subscription plan thus can be tweaking each feature. For example, a platinum subscribers ventilated seats can go down to 17 degree centigrade, 25C for a gold subscriber, so on and so forth.

This way, manufacturers will be able to install same hardware across all cars and mint money by just changing the subscription package which will just change the software settings for each feature.

Customers also should stop complaining that the bare minimum feature is absent in his/her car. Just upgrading from Silver to Platinum will enhance the comfort and (maybe) safety to the next level.

[narayans80]

Subscriptions even in the software space, work for businesses that have time boxed requirement.

In the case of vehicles, it only makes sense for rented or leased vehicles, where the cost will depend on the services chosen.

For individuals who want to own, it does not makes sense. The idea looks as ridiculous as this Ryan Air spoof from the 2000s.

https://www.youtube.com/watch?v=8gndcq5NpMg