In the ever-evolving landscape of the automotive industry, manufacturers are constantly seeking new ways to enhance the driving experience and keep customers engaged, as well as earn more money. One of the latest trends is offering subscriptions for various features in cars, but it's a strategy that could be turning sour with consumers. Genesis’ recent announcement, offering free access to telematics services for new vehicle owners, is a notable counterpoint to this trend, and it raises questions about the viability of subscription-based services in the automotive world.
The luxury car brand from South Korea has decided to provide complimentary access with no expiration date to its telematics suite, Genesis Connected Services, for all owners and lessees of 2023 and newer model-year vehicles. This suite includes safety, maintenance, convenience, and remote features. The move, the company says, is aimed at enhancing customer satisfaction and loyalty by providing a premium connectivity programme for first-time owners. Previously, the services were free for the first three years of ownership.
Gallery: 2024 Genesis GV80 Coupe
While Genesis's approach represents a significant shift away from traditional subscription models, it aligns with the sentiment expressed by consumers who are increasingly averse to paying for individual features on a recurring basis. This move also reflects an understanding that first-time owners, in particular, may be hesitant to commit to additional subscription costs immediately after purchasing a vehicle.
In contrast, some automakers are still grappling with the challenge of selling feature subscriptions to their customers. BMW's recent decision to eliminate subscription fees for heated seats underscores the complexities and consumer resistance associated with such offerings. Pieter Nota, BMW's board member for sales and marketing, acknowledged that "user acceptance isn't that high" for certain subscription services in an interview last month. Customers may feel they are being charged twice, once during the initial purchase and again for subscription features.
Recent studies have shown that consumers are open to subscription models for certain features that genuinely enhance their driving experience. According to an S&P Global Mobility study, consumers express a strong desire for advanced navigation and driver-assist systems. Additionally, a Cox Automotive study revealed that only 21 percent of in-market car buyers are aware of in-vehicle subscription services. More tellingly, over half of the respondents saw subscription services as a benefit only if they led to a lower upfront vehicle price.
These findings illustrate the delicate balance automakers must maintain when considering subscription-based models. While some features may genuinely add value and convenience to the driving experience, others may be viewed as unnecessary add-ons that inflate the cost of ownership.