Automakers eye profits as consumers balk at subscription-based car features

As subscription-based services become increasingly prevalent in our digital lives, automakers are now venturing into the realm of monthly fees for car features — still, Americans are showing resistance to this trend, particularly considering the high cost of new vehicles.

With cars becoming more connected to the internet and cloud services, automakers see the potential for substantial revenue from these add-ons. Yet, a recent study by Cox Automotive revealed that 75% of respondents believe these “features on demand” (FoD) are primarily intended to boost automakers’ profits.

Furthermore, 69% of participants stated that if specific features were only available through subscriptions for a particular brand, they would likely explore alternative options, and this resistance poses a significant challenge for automakers who are banking on generating billions in revenue from subscription services.

Despite the pushback, automakers remain determined to pursue this business model as a new frontier for profit generation — Alistair Weaver, the editor-in-chief of automotive research firm Edmunds, emphasized that it’s not solely luxury brands adopting this approach, with General Motors and Ford also actively exploring subscription-based features.

BMW may charge a monthly fee for activating heated seats

One controversial example that caused a stir was BMW’s introduction of subscription pricing for heated seats, even though the seats were already installed in most BMW models. While this feature was only implemented in international regions and not in the US, many BMW enthusiasts expressed frustration at the notion of having to pay extra to activate an integral component that came with the vehicle.

Although companies like Tesla have employed subscriptions or “features on demand” for options such as Autopilot and full-self driving (FSD) beta features, these are typically software add-ons that enhance the car’s capabilities. In contrast, the subscription-based model for physical features has raised concerns among consumers who question why they should pay extra to enable functionalities that are already built into the car.

As the debate surrounding subscription-based car features continues, automakers will need to navigate consumer sentiment carefully while exploring innovative ways to boost revenue in an evolving industry landscape.

Filed in Transportation. Read more about Cars and Subscription.