BMW's Subscription Service For Features Is Here To Stay

Technology / Comments

Get ready to pay a fee for that heated steering wheel.

If you study public outcry closely, you'll note that BMW did two terrible things this year. First, it subjected all our eyeballs to the horror that is the XM. Secondly, it announced the now infamous subscription service for certain features, which is currently undergoing a trial period in South Korea.

While there was plenty of outrage, one of our younger team members thought it was a good idea. And now the research shows that he was right all along. According to vehicle connectivity expert VNC Automotive, subscription features will grow in popularity as consumers move away from outright ownership.

If you think about it, a large chunk of our lives is already subscription-based. We pay monthly fees for phones, streaming services, and even dental care.

VNC Automotive

According to VNC Automotive, "this familiarity may smooth the transition for manufacturers as they look to recreate that model inside their vehicles."

The potential of activating and deactivating features as required is also appealing from a budget perspective. Heated seats are wasted during the summer months, as is a rear-seat entertainment system like you'll find in the new 7 Series during the daily commute. A subscription service allows a customer to only pay for these features when needed.

Still, VNC Automotive admits there is tension between OEMs wanting to maximize their revenue and customers wishing to use the hardware already fitted to their vehicles. VNC maintains there is a happy medium, assuming that "OEMs streamline the payment structure beyond dumb annual fees."

BMW

There is a win-win scenario in this mess. Subscription features make the car more configurable for subsequent owners, which is something never seen in the used car segment before. It's like buying a new vehicle and ticking all the option boxes.

It also gives OEMs a means of making money out of over-the-air updates, or "digital valets," as we'll call them in the future. VNC states that service intervals are getting longer, and these digital valets could offset a manufacturer's losses. Think of Rivian's new Camp Mode for the R1T truck. Now imagine paying for that as a subscription but only for the six times a year you actually use it.

BMW

Customers switching between vehicles could also have their subscribed features move with them, with options activated according to each driver's subscription package. These packages represent an opportunity for OEMs to lock customers into a personalized subscription, which encourages brand loyalty.

However, we don't know whether this is the healthiest way to encourage brand loyalty. We'd much rather a brand earn loyalty by producing quality products than lock a person into a subscription model.

"Exciting new features or upgrades for a vehicle are a strong incentive for traditional vehicle users to subscribe. Such models give OEMs the best chance of marketing more features over the vehicle's lifetime," said Peter Galek, product engineering director at VNC Automotive.

In related news, new research by YouGov shows that customers are more accepting of rented vehicle access. Three in ten (30%) Americans and Brits don't want to be locked into owning a vehicle because their needs may change.

BMW

The research specifically mentions Care by Volvo, which was launched in 2017. Simply put, the owner pays a monthly subscription fee for the car, including "insurance, service, maintenance, and basically everything except gas." An updated version of Care also allows customers to switch between vehicles as needed.

"Witness the monumental shift in the entertainment industry for streaming music and movies. Short-term leases and shared car ownership schemes like Zipcar and Co-Wheels versus having a car sat in the driveway show customers are open to the idea of subscriptions," suggests Agustin Almansi, Sales Engineering Director at VNC Automotive.

"It's clear to see that convenience and choice are key drivers behind a subscription model for certain vehicle features, and if such a move does deliver the flexibility that customers increasingly expect in everyday life, there's a very strong case that such an approach will become the norm rather than the exception."

BMW

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