Subscriptions are a relatively new revenue stream for automakers, allowing companies to earn extra money even after a customer buys the car. It has its roots in the luxury segment, but many mainstream brands have implemented similar strategies by creating online stores. Just like you purchase downloadable content for a video game, you can add features to your vehicle.
Mercedes is a great example of how an automaker can become more profitable by charging customers for certain features during their ownership. Magnus Ostberg, the company’s software director, was interviewed by Higher speed magazine what he thinks of BMW’s decision to charge extra for heated seats.
The Stuttgart-based brand takes a different approach by offering a “luxury, holistic experience” without “nickel-and-tarnishing our customers.” He went on to admit that Mercedes offers subscription packages, but its customers “don’t want to be nickel and dimed.”
In 2022, BMW has been making headlines for all the wrong reasons. It started offering a subscription plan for heated seats. Obviously the car already had the necessary hardware from the factory, but it was locked behind a paywall. Those who purchased a vehicle without checking the box for heated seats could unlock the feature after taking delivery. Following negative reactions and a low acceptance rate, the controversial subscription was abandoned. However, the Munich brand still offers many other paid features.
Mercedes also caused controversy in 2021 when it launched a subscription plan for the EQS’s more advanced rear-wheel steering system. Standard, the luxury sedan has a 4.5-degree rear steering angle in some markets, but owners can pay extra for a full 10-degree steering angle. It’s worth noting that the more sophisticated system is standard on the EQS sold in the United States. Let’s not forget the subscription to access more power on certain EQ models.
As for other features you can get after purchase, Mercedes and BMW offer many benefits. The three-pointed star has an Excellence Pack with 22 “digital extras” such as auxiliary heating/ventilation, remote door lock/unlock and remote window/sunroof control. You can also pay extra for digital radio, headlights with adaptive high beams, adaptive cruise control and others. The full list can be accessed here, but availability depends on country, model and whether certain hardware is already installed on the car.
And BMW? We checked in the UK store where we found many items. The Bavarian brand also offers adaptive cruise control and high beam assistant, as well as Apple CarPlay integration and adaptive M suspension. There are also subscriptions for map updates and fake engine sounds, as well as packages bundling certain driver assistance and safety systems. We should mention that some items are available with monthly or annual plans while others require a one-time fee to unlock the feature permanently.
Automakers believe subscriptions will become huge money-making tools. Stellantis estimates that it will earn an additional €4 billion each year by 2026 from its “monetizable connected cars”, which will reach €20 billion per year by the end of the decade.
Paying to access a feature that requires hardware already inside the car is a tough pill to swallow. Nonetheless, it seems that automakers are convinced that people will spend money every month or year to use a feature deliberately blocked by the automaker. A survey conducted by S&P Global Mobility last year found that 82% of respondents were willing to purchase a subscription.
Note: The content and images used in this article is rewritten and sourced from www.motor1.com