Quantfury Daily Gazette
You wouldn’t download a car
Billions of dollars in potential profits are up in the air as car companies consider implementing monthly subscription fees to unlock additional services or features. The opportunity for car manufacturers to implement subscriptions arises partly from the fact that modern-day cars are outfitted with advanced computer technology and better internet connectivity. On the other hand, the advantage of this pay-as-you-go model is straightforward: automakers see dollar signs.
Certain carmakers already have a subscription system in place for features such as automatic high beams, hands-free highway driving, and remote starting. Ford Motor Company (NYSE: F) and General Motors Co. (NYSE: GM) are among these companies that plan to generate 20 billion dollars in annual revenues by 2030 through “software services.” Both companies offer subscription plans for their hands-free highway driving systems. In 2020, Bayerische Motoren Werke AG (BATS Europe: BMW) floated the idea of pay-as-you-go heated seats and steering wheels.
In 2019, BMW abandoned its plan to charge drivers an $80 annual subscription fee to unlock Apple (NASDAQ: AAPL) CarPlay services after being met with widespread backlash. Being nickeled and dimed while driving luxury vehicles, which cost a small fortune to purchase in the first place, just doesn’t feel right. Could you imagine paying $250,000 for a car only to then be pestered to pay $5 each month to enable the use of seatbelts?
For car buyers, paying a subscription fee sends the message that they are forced to purchase the car twice – once for certain functions and again over time for using them. If car manufacturers want to charge more for certain features, maybe include it in the upfront price, but they shouldn’t charge through a monthly subscription for features you may already have paid extra for!
In my opinion, the only possible way to justify this for consumers is to introduce innovative new services, not for features consumers are well familiar with. And, if a subscription system was in place for something like heated seats, then the manufacturer should cover the cost of repairs since the subscription suggests the car owner doesn’t own the seat-heating.
It is also an overall negative trend for consumers as businesses in other industries begin to adopt the practice of taking inclusive features and converting them to monthly subscriptions, greedily maximizing profits at the consumer’s expense. A delicate balance should be reached that protects the consumer while allowing businesses to profit. Otherwise, we might end up with a future where another surcharge will be added to the monthly bill every time you hit the brakes.
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