Automakers are experimenting with a car ownership model that would allow drivers to pay subscription fees to access their cars’ technologies. A new study shows that most car buyers are unaware of the concept, and while some are open to it, most are wary.
How subscriptions would work
In a world of car subscriptions, you would still buy your car. But you’ll pay monthly or per-use fees for some of the technology inside.
This would allow you to turn them on and off according to your wishes and budget. But it would also eliminate the idea of ever paying off a car.
Today, car buyers choose the features they want when they buy their car. This often means paying for packages that include some features they want and some they don’t care about. To get the sunroof, for example, you might be stuck paying for 18-inch wheels instead of 17-inch wheels.
Automakers must build cars with different combinations of features to meet customer needs. This may mean shutting down factory lines to retool them for different configurations. It can also mean building multiple versions of a part, for example some steering wheels with heaters and some without.
Instead, automakers could build every car with every available option. They could then use always-on internet connections to enable or disable these features based on the customer’s wishes. You can choose to pay $2.99 a month for that heated steering wheel because it’s cold where you live. The owner of an identical car in South Texas may never subscribe.
Functions on Demand, as the concept is called, offers buyers new flexibility. They could even lead to a reduction in entry-level car prices.
The idea doesn’t just apply to creature comforts. Mercedes already sells subscriptions to boost power in some of its electric vehicles. Volkswagen officials have publicly toyed with self-driving software that collects ticket prices to different destinations.
But it could also end the property. Even after buying a used car, you may have to pay subscription fees to access its stereo speakers or heated seats.
Most consumers don’t know
A new study by Cox Automotive (the parent company of Kelley Blue Book) finds that only 21% of new car buyers are aware of the idea. Once explained, some buyers can see the advantages. But most are not fans of the concept.
Cox Automotive researchers surveyed 2,000 vehicle buyers in the market in late December and early January to determine their interest in vehicle features through subscription-type services.
Once he explained the concept to them, only 41% were interested.
“Our initial research indicates that the transition to Features-on-Demand will be an uphill battle for many automakers,” said Vanessa Ton, senior director of market and customer research at Cox Automotive, who helped lead the research project. “In the market right now, there is little consumer awareness and some skepticism on the part of buyers.”
Some are open to fluctuating payments, chances to test new technology
After being told the idea, 65% of respondents said they could use it to test new features without making a long-term commitment. Sixty-one percent liked the idea of upgrading or downgrading their vehicle as needed. 54% liked the idea that subscriptions could give them access to the latest technology even years after they bought their new car.
The technologies buyers were most interested in included stolen vehicle tracking and recovery systems, parking assist features, digital keys via smartphone apps and in-vehicle Wi-Fi. Stolen vehicle recovery services, however, can be tricky terrain for automakers. Volkswagen recently apologized and made these services free after police were unable to track down a stolen car with a child in it due to an unpaid bill.
According to the report, streaming services, virtual assistants and driver supervision or self-driving capabilities may win some long-term subscribers.
Mandatory subscriptions would drive away buyers
But most buyers were skeptical of the whole enterprise. Seventy-seven percent said it would allow automakers to make more money. Fifty-eight percent said it would be too expensive.
Perhaps most importantly, the survey offered caution for automakers. Buyers say switching to subscription services should be optional: 69% said if a car brand made subscriptions mandatory, they wouldn’t consider buying from that company.
The idea also raises regulatory concerns. Mercedes’ horse rental scheme is offered in the US, but the company has concluded that it is illegal in Europe. New Jersey lawmakers have proposed banning the practice in that state.
“To gain consumer acceptance, automakers need to make sure that consumers perceive subscription-based features as good value and not just a money grab,” warns Ton.
The research, Ton says, suggests that automakers “will need to move away from mandates and instead make it easier for consumers to access features by offering free trials of safety and convenience options.”
