Photo: GM
The car industry faces disruptions as the sales model they were used to started to disintegrate in the past years. Carmakers search for new revenue streams to make up for the losses in sales, but their expectations seem rather unrealistic. Car buyers just don’t want to pay extra, let alone monthly, for features they feel should come free with their vehicle purchase.
Big tech has long enjoyed healthy profit margins that the auto industry can only dream about. That’s why the biggest carmakers today bet big on subscription services, even when they don’t have a clear understanding of what that means. According to an Axios report, General Motors expects its customers to pay as much as $135 per month for subscription services. After all, there’s nothing better than a constant stream of money filling the coffers without much trouble for the carmaker, right?
This might come at odds with customers’ expectations, who already face increased prices. According to a recent study by Kelly Blue Book, the average retail price of a new vehicle rose to $45,927, and this is already more than a lot of people can afford to pay. This partly explains why car buyers expect most features and services related to their vehicle to be included in the upfront sales price.
According to a Cox Automotive study, three-quarters of consumers surveyed indicated they are not willing to pay an annual or monthly subscription fee. Safety and comfort features should be included in the price of the vehicle and not locked behind a subscription fee. Consumers do admit that some services like in-vehicle Wi-Fi or stolen vehicle tracking require a subscription and are willing to pay to some extent.
Nevertheless, the consumers are also squeezed by other expenses, as pretty much everything is more expensive these days. This starts with the gas and goes as far as buying food. Take into account that most car buyers already pay subscription fees for streaming services like Netflix or Spotify and you’ll see why they are reluctant to pay even more every month just to use some features that are already baked into their cars. If we look at Netflix, we’ve already seen a lot of people departing the platform. This is a clear indication people are fed up with paying subscriptions.
The subscription model has not gone very well with carmakers in the past. At one time, BMW demanded a subscription for using Apple CarPlay inside their cars, but the backlash that followed forced the Bavarians to abandon the idea. Toyota faced a similar problem when they limited remote start functionality to customers paying a monthly subscription. And somehow, the carmakers keep trying to force this model on our throats.
This might come at odds with customers’ expectations, who already face increased prices. According to a recent study by Kelly Blue Book, the average retail price of a new vehicle rose to $45,927, and this is already more than a lot of people can afford to pay. This partly explains why car buyers expect most features and services related to their vehicle to be included in the upfront sales price.
According to a Cox Automotive study, three-quarters of consumers surveyed indicated they are not willing to pay an annual or monthly subscription fee. Safety and comfort features should be included in the price of the vehicle and not locked behind a subscription fee. Consumers do admit that some services like in-vehicle Wi-Fi or stolen vehicle tracking require a subscription and are willing to pay to some extent.
Nevertheless, the consumers are also squeezed by other expenses, as pretty much everything is more expensive these days. This starts with the gas and goes as far as buying food. Take into account that most car buyers already pay subscription fees for streaming services like Netflix or Spotify and you’ll see why they are reluctant to pay even more every month just to use some features that are already baked into their cars. If we look at Netflix, we’ve already seen a lot of people departing the platform. This is a clear indication people are fed up with paying subscriptions.
The subscription model has not gone very well with carmakers in the past. At one time, BMW demanded a subscription for using Apple CarPlay inside their cars, but the backlash that followed forced the Bavarians to abandon the idea. Toyota faced a similar problem when they limited remote start functionality to customers paying a monthly subscription. And somehow, the carmakers keep trying to force this model on our throats.
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