Why Automakers Will Struggle To Mint Money With Subscription Features

According to a recent study conducted by Cox Automotive, automakers may encounter difficulties in generating revenue from subscription-type features or features on demand due to low consumer awareness and skepticism.

“To gain consumer acceptance, automakers must ensure consumers perceive subscription-based features as a good value and not just a money-grab," said senior manager of market and customer research Vanessa Ton. 

Research Points: The study revealed that only 21% of vehicle shoppers are aware of the concept of subscription-type features, although 41% expressed interest in them. Shoppers recognized benefits such as lower initial vehicle costs, the flexibility to try out features without long-term commitments, and the option to upgrade vehicles.

However, approximately 58% of shoppers expected the concept to be expensive and believed it would primarily serve as a profit source for automakers. Privacy and security concerns were also expressed by consumers.

To address consumer hesitancy, the research suggests implementing free trials and gradually introducing customers to the features.

The significance of this research lies in the ongoing experimentation by various automakers in offering features on demand. Some examples include Tesla Inc‘s TSLA full self-driving beta software and BMW‘s BMWYY introduction of subscriptions for services like heated seats at a monthly fee of $18. Mercedes-Benz MBGAF MBGYY also allows select electric vehicle users to unlock additional power through a $1,200 annual subscription.

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