How Subscriptions Would Work
In a world of in-car subscriptions, you’d still buy your car. But you’d pay monthly or per-use fees for some technologies inside of it.
This would allow you to turn them on and off to suit your desires and budget. But it would also eliminate the idea of ever paying off a car.
Today, car shoppers pick the features they want when they buy their car. That often means paying for packages that include some features they want and some they don’t care about. To get the sunroof, for instance, you may be stuck paying for 18-inch wheels instead of 17-inch wheels.
Automakers must build cars with varying combinations of features to meet customers’ needs. That can mean shutting down factory lines to retool for different configurations. It can also mean building multiple versions of a part – say, some steering wheels with heaters and some without.
Instead, automakers could build every car with every available option. They could then use always-on internet connections to turn those features on or off based on a customer’s desires. You might choose to pay $2.99 per month for that heated steering wheel because it’s cold where you live. The owner of an identical car in South Texas might never subscribe to it.
Features-on-Demand, as the concept is called, gives buyers new flexibility. They could even lead to lower up-front car prices.
The idea doesn’t just apply to creature comforts. Mercedes already sells subscriptions to added horsepower in some of its EVs. Volkswagen officials have publicly toyed with self-driving software that charges ticket prices to different destinations.
But it could also end ownership. Even after buying a used car, you might have to pay subscription fees to access its stereo speakers or heated seats.
Most Consumers Don’t Know About It
A new study from Cox Automotive (Kelley Blue Book’s parent company) finds that only 21% of new car shoppers are aware of the idea. Once told about it, some shoppers can see the advantages. But most aren’t fans of the concept.
Cox Automotive researchers surveyed 2,000 in-market vehicle shoppers in late December and early January to determine their interest in vehicle features through subscription-type services.
Once the concept was explained to them, just 41% were interested.
“Our initial research indicates that the transition to Features-on-Demand will be an uphill battle for many automakers,” said Vanessa Ton, senior manager of market and customer research at Cox Automotive, who helped lead the research project. “In the market right now, there is low consumer awareness and some skepticism on the part of shoppers.”
Some Open to Fluctuating Payments, Chances to Test-Drive New Tech
Once the idea was explained, 65% of respondents said they might use it to try out new features without making a long-term commitment. Sixty-one percent liked the idea of upgrading or downgrading their vehicle as needed. 54% liked the idea that subscriptions could give them access to the latest technology even years after they bought their new car.
The technologies shoppers were most interested in included stolen vehicle location and recovery systems, parking-assist features, digital keys via smartphone applications, and in-vehicle Wi-Fi. Stolen vehicle recovery services, however, can be complicated ground for automakers. Volkswagen recently apologized and made such services complimentary after police could not track a stolen car with a child in it because of an unpaid account.
According to the report, streaming services, virtual assistants, and driver monitoring or self-driving capabilities might get some subscribers in the long term.
Mandatory Subscriptions Would Drive Away Shoppers
But most shoppers were skeptical of the whole enterprise. Seventy-seven percent noted that it would allow automakers to make more money. Fifty-eight percent said it would be too expensive.
Perhaps most importantly, the survey offered caution for automakers. Buyers say that moving to subscription services must be optional — 69% said that if a car brand made subscriptions mandatory, they wouldn’t consider buying from that company.
The idea also raises regulatory concerns. Mercedes’ rent-a-horsepower plan is offered in the U.S., but the company has concluded that it’s illegal in Europe. Lawmakers in New Jersey have proposed outlawing the practice in that state.
“To gain consumer acceptance, automakers must ensure consumers perceive subscription-based features as a good value and not just a money-grab,” cautions Ton.
The research, Ton says, suggests that automakers “will need to steer away from mandates and instead ease consumers into features they can access by offering free trials on safety and convenience options.”