Subscriptions. Car companies a giddy over the possibility of making money from car buyers both at the time of the purchase, but also afterward. Before the advent of subscription services looming on the horizon, automakers had few ways to get into your pockets a second time. But now, even heated seats may become part of a subscription you’ll have to pay annually to manufacturers.
What are car subscriptions?
Before now, the way car companies made money off of buyers was through interest on loans, and the occasional component replacement. But these car subscription over-the-air updates have them salivating. And we’re talking about billions of dollars for every company planning on shoveling in payments for subscription upgrades.
“We intend to deepen the emotional bond between our customers and the brands they love,” Mamatha Chamarthi, head of Stellantis’ software business, recently said to investors. But what she leaves out is that Stellantis anticipates that by 2030 subscription services could rake in an additional $225 billion. Annually. And we won’t even get into the deposit or membership fees attached to some subscription services.
Car subscriptions: you’ll pay for things you used to get with vehicles
Just like Apple, which has forged a bond with customers partially from using its connectivity to produce increased annual revenue. “If the past was about increasing margins by moving customers north in hardware and trim levels, our future is about offering customers software-based services,” Chamarthi said. According to Automotive News, Apple’s 2021 operating margin is almost 30 percent, while Stellantis’ is 10 percent.
BMW is the company eyeing heated seats and its Adaptive M Suspensions as just two ways to part you from your money. As you’re well aware, those two features were a one-time cost in our recent past. You paid for them at the time of the purchase, and that was it. But with all of these automakers looking at Apple and Tesla with sugarplums dancing in their heads over post-purchase revenue, they see car subscriptions as the next big bonus.
All of these companies have seen their fortunes rise on Wall Street. They see that once they separate themselves from their rustbelt past and fashion themselves as software companies, investors have come running. Buyers, on the news of paying for heated seats annually, should be running in the opposite direction.
“Just like with a smartphone”
From BMW, “Since 2018, the Remote Software Upgrade has enabled BMW drivers to keep their vehicle up to date with the latest software, just like with a smartphone. The new functions can be downloaded and installed over-the-air. This is particularly convenient and extremely fast: even for extensive upgrades, hardly more than 20 minutes of pure installation time is required. With Remote Software Upgrade, BMW also offers its customers maximum flexibility and security when booking optional extras at a later date – regardless of whether the vehicle is new or used.”
Can you just feel the auto execs quivering at the prospects? A heated steering wheel? Now it’s an annual subscription. Rear-facing cameras? Subscription. Heater? Well, we doubt even BMW would make it necessary to subscribe, but you get the drift. This premium brand will only sell you a stripped car, that is until you pay for your heated side mirrors. Then, it is premium again. Just like in 2018.