For many consumers, vehicle shopping is an incredibly personal experience. There’s a multitude of options for makes and models, body types, and styles available, and a person’s preferences reflect their needs and tastes. Someone prioritizing their vehicle as a workhorse may lean towards a truck, some others may want a sporty vehicle, and another could want the practicality of a sedan.

Of course, the options don’t end at the type of vehicle itself. When a consumer selects a particular vehicle, they also need to choose the trim and amenities. More and more often, these options are being made available through subscription services, rather than being a lifetime feature included in the package. While subscription services have become ubiquitous in many other industries, this new trend impacts the automotive industry. Learn more about how subscription-based car features work, examples of these features, and how they can impact the customers. 

What Are Car Subscription Services?

Modern vehicles are increasingly connected. For many years now, different cars and trucks have had the ability to connect to mobile phones for integrating apps for features such as navigation, playing music, and taking calls.

However, many cars are now themselves connected. Vehicle makers have now added or altered features, so that rather than being bundled into the initial sale of a vehicle, they are paywalled behind a monthly subscription service. The automaker can turn features on and off remotely, based on whether a driver is subscribed. Some vehicle makers will offer temporary free subscriptions, not unlike streaming services, for new car owners to try out features¹.

What Are Examples of Subscription-Based Car Features?

In principle, a subscription fee can be added to any electronic component that can be controlled remotely. Automaker BMW has already begun experimenting with subscription services. Internationally, they launched a monthly fee for heated seats².

In the United States, a Traffic Camera feature for alerting drivers about speed cameras requires an annual subscription³. Other features, such as a remote starter for your engine can either be purchased outright or on a monthly, yearly, or multi-year basis with varying costs.

Paywalled features aren’t limited to convenience and stylistic features. Mercedes launched a horsepower subscription service in their electric vehicles. Since the vehicle's movement is electronic, performance can be limited remotely. Several models could unlock additional performance potential for a yearly payment of $1,200².

Potential Challenges and Opportunities for New Features 

It’s clear that these new monthly and yearly services can provide an additional and ongoing revenue stream for automakers. Rather than only selling a vehicle, they can have repeat payments from the buyer for as long as they own the car. This is a big benefit for automakers, but what does it mean for consumers and dealerships?

On one hand, consumers may be turned off by needing to pay for features that are typically included with the vehicle. Anything that discourages the consumer from a particular sale will, of course, impact what types of vehicles dealerships are able to offer. There is also a concern that the change will impact dealer profits, so there is a push for legislation that allows dealerships themselves to benefit from ongoing services as well as the automakers. On the other hand, there’s also a potential opportunity for turning these into a selling point¹.

According to Automotive News, the CEO of GM spoke on subscription-based services, stating that, “If I buy my vehicle today and two years from now, there’s something that’s been invented that’s new, or a new service or a new feature, people are willing to pay for that.”

This viewpoint is more focused on not just continually charging for functions that were previously bundled with the car, but also opening up opportunities to upsell brand-new features for as long as the customer owns it. This could include driving safety features, integrated hotspots for connectivity, and other emerging technologies.

In this way, pay-to-play features can become a selling point for dealerships, in addition to being an increased revenue stream. Consumers can drive a car off the lot knowing there may be additional features and upgrades in the future that can improve their car’s performance and convenience. This makes additional charges function more like an upgrade⁴.

This upgrade system can be extended to smart features that are considered game-changing technologies. Rather than focusing on newer versions of existing technologies, new services that change the way we drive can be implemented as well. For example, Tesla has implemented a self-driving subscription service⁵. This upgrade allows users to access an autopilot feature built into the car for automated navigation, lane detection and changing, and more. Consumers looking for cutting-edge technology in their features may be more inclined to look for vehicles offering such services. Having them as a subscription means that they can opt into the additional cost later in the vehicle ownership or cancel if it’s a feature they determine isn’t something they require⁴.

One thing is for sure: subscription-based car features are here to stay and likely to grow even more over the next few years. Vehicles with upgrade options that are enabled and disabled remotely may become the norm and something that dealerships need to integrate into their sales strategies and vehicle choices. The increased complexity makes it even more important to source vehicles from a knowledgeable and trustworthy source.

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Sources

1. Tucker, S. (6 March 2023). Dealers Fight Subscription Fees for Car Features. Kelley Blue Book. Retrieved on September 20, 2023, from https://www.kbb.com/car-news/dealers-fight-subscription-fees-for-car-features/
2. Stern, P. (10 January 2023). BMW Adds More Subscriptions to Its Vehicles. U.S. News & World Report. Retrieved on September 20, 2023, from https://cars.usnews.com/cars-trucks/features/bmw-features-subscription
3. Vincent, J. (12 July 2022). BMW starts selling heated seat subscriptions for $18 a month. The Verge. Retrieved on September 20, 2023, from https://www.theverge.com/2022/7/12/23204950/bmw-subscriptions-microtransactions-heated-seats-feature
4. Vanhulle, L. (1 June 2023). GM’s Barra: Profit potential in ‘above and beyond’ tech, not heated seats. Automotive News. Retrieved on September 20, 2023, from https://www.autonews.com/automakers-suppliers/gm-ceo-mary-barra-software-services-autonomy-mean-growth?AutomotiveVentures
5. Full Self Driving Capability Subscriptions. Tesla. Retrieved on September 20, 2023, from  https://www.tesla.com/support/full-self-driving-subscriptions