The trend of adding subscription-based features to cars is gaining traction among automakers. These features are often referred to as "features on demand" (FoD) and allow car owners to purchase additional features and services for their vehicles on a subscription basis. While some automakers have been experimenting with this model for a while, the practice is becoming more widespread across the industry.
Automakers are keen on this new revenue source as they look to increase profits. Wall Street analysts and investors also view these subscription fees as a way to boost revenue and drive up share prices. However, consumers are not as enthusiastic about the trend. A recent study by Cox Automotive found that 69% of respondents said that if certain features were available only via subscription for a particular brand, they would likely shop elsewhere. Additionally, 75% of respondents agreed that "features on demand will allow automakers to make more money."
One of the major concerns for car owners is the high cost of new cars. The average price of a new car in the US is nearly $50,000, and adding subscription-based features on top of that can be a hard pill to swallow. Some car owners feel that these features should be included in the initial purchase price of the car and that charging extra for them is unfair.
One example of a controversial subscription-based feature is the heated seats in BMW cars. BMW caused an uproar when it introduced subscription pricing for heated seats in its cars, even though the feature was already built into the car. While the feature was only turned on in international regions and not the US, it still caused frustration among BMW enthusiasts and car buyers alike.
While some automakers like Tesla have been utilizing subscription or features on demand for software add-ons like Autopilot and full-self driving (FSD), the trend is expanding to physical features as well. For example, Mercedes is offering a subscription feature for its EQ-series EVs that allows owners to unlock more power for their cars. However, some consumers are hesitant to pay extra for features that are already built into their cars.
To make these subscription-based services more palatable to consumers, some automakers are offering free trial periods for add-on features. For example, Toyota is offering one-year trials for many of its models and three-year trials for many Lexus models to introduce drivers to the features and benefits of their Connected Services before a subscription plan is necessary. A recent survey by Cox Automotive found that 65% of respondents suggested a free trial period for add-on features would be a positive selling point and make them more likely to consider a brand.
In conclusion, the trend of adding subscription-based features to cars is here to stay. While automakers see this as a new revenue source, car owners are not as enthusiastic about paying extra for features that they feel should be included in the initial purchase price. To make these features more attractive to consumers, automakers will need to find ways to offer them at a reasonable price and provide free trial periods to help consumers decide if they are worth the extra cost.
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