Raising revenues at the expense of consumers

This month BMW has found themselves in hot water once again. This time, it's not for producing cars without touchscreens or common convenience features due to the microchip shortage. Instead, they are now charging for them. For $18 a month, select countries can opt for heated seating in BMW models, a feature that has generally always come standard in BMW purchases. Not to mention, it's a feature that comes at no additional cost in most makes and models around the world. The $18 per month is a huge blow to BMW drivers. Even so, this isn't the first time that BMW has tried to make a monthly subscription a thing. The heated seating option follows a previous failed attempt to charge customers $80 a month for Apply CarPlay and Android Auto. All said and done, it's obvious the German automaker is looking for ways to increase revenues. But, what about their customers? The choice to incorporate car subscriptions into vehicle purchases gives really no benefit to the everyday consumer. Though automakers are in the business of making money, many of the features that are being considered for car subscriptions are ones that already exist. Many of which have been around for years. Thus far, Cadillac, Porsche, Tesla, and Audi have all incorporated some form of in-car subscriptions to their sales. Most are in regard to safety and software conveniences like voice detection and driver assistance, however, the scope will likely increase in the years to come. The concept of car subscriptions is not new. You know this particularly if you drive a vehicle under General Motor's umbrella. GM currently earns over $2 billion in car subscription services per year. In addition, they have an ambitious plan to extend to 50 in-car subscription options by 2026. Most notable is their OnStar program which offers turn-by-turn navigation, emergency services, and in-vehicle security. With four prices options available, the most expensive includes an all-inclusive plan with automatic crash response, stolen vehicle assistance, and on-demand diagnostics for just under $50. GM's success shows that consumers are willing to pay the monthly or annual service fees (if necessary). The question is: Do they hate it?

What do consumers think?

In a survey conducted by Cox Automotive, findings showed that only 25% of new car shoppers would be willing to pay a monthly or annual fee. The other 75% simply couldn't get on board with the extra expense. Of the 25% that were willing to pay an annual or monthly fee, only a few features were deemed worthy of the added cost. Among those mentioned in the study were advanced driver assist technology and performance upgrades. In reference to GM, the cost of Premium OnStar is relatively low in comparison to what some analysts have suggested that consumers will pay down the road. Most have mentioned amounts over $100 per month for in-car subscriptions, which falls on top of the already mounting car expenses like gas, insurance, and monthly payments. In general, there's a fine line between what consumers deem worth the cost versus a waste of money.

Overview of car subscriptions

Right now, the majority of car subscriptions come from luxury automakers, as mentioned above. This is largely due to the financial status of luxury car buyers because they can afford the added cost. Or at best, it's not a deal breaker for them with consideration of a specific vehicle. However, with the way things are progressing in the automotive market, analysts predict we'll soon see more mass market retailers charging annual or monthly fees for common car features or upgraded software. Leading to the supposition that it's a quick fix for raising revenues, consumers are admittedly not impressed. No matter if this helps speed up electric production and autonomous technologies in the future. Automotive analysts agree that when it comes to in-car subscriptions, consumers will generally pay for upgraded features or software but not for items they've enjoyed for years on end without charge. Stuff like heated steering wheels and Apply CarPlay and Android Auto already exist as daily comforts for millions of drivers around the world. So, the question is: Would you pay for them? Most drivers would agree that automakers will find little success with swaying consumer option. This new means of making money is not the answer. The bottom line: An expensive car market is not the time to bring forth in-car subscription to new car buyers.