Car makers are exploring new avenues when it comes to income diversification. Some, such as Volvo, are exploring subscription-based ownership where customers pay one monthly fee that covers the cost of the car payment, insurance, maintenance, and more. Others, like BMW, are putting features such as Apple CarPlay behind an £60 yearly paywall.
They're mimicking business plans of other companies such as Netflix, Spotify, Hulu, and Audible, which charge monthly fees for access to services or content. It helps lower the initial cost to customers, but how much money have you spent rewatching The Office on Netflix on an endless loop? As carmakers look to new revenue streams in a market with an uncertain future, there will be more of these types of services. Mercedes, for example, could do this with some in-car features in the future.
Mercedes software developer Markus Ehmann spoke with Drive.com.au about allowing customers to turn on and off in-car features. Ehmann said the automaker is “working on a robust platform that allows the user, the drivers, to turn features on and off in their car – possibly an extra feature that costs money or something they know they don’t want.” The manufacturer is actively working on several subscription-based features.
But that’s not all. Ehmann said the subscription model could be applied to things other than software. Drive.com.au asked specifically about physical elements such as heated seats to which Ehmann replied, “I would say that it could be both.” This opens the door to customers paying for heated seats in the winter and then saving money in during summer months by disabling the feature. Or you could pay a one-time fee upfront and avoid the hassle.
Imagine paying £40,000 for a Mercedes and then having to pay like £40 month to have access to the heated seats. Would there be a price point that includes heated seats without the monthly subscription or would this become normal where carmakers jump on the subscription bandwagon in an attempt to wring more money from customers?
It's too early to tell where they will stop when it comes to the pursuit of profits. None of this sounds consumer friendly, but we’ll have to wait to see how customers respond.