Just 25 Percent Of Car Buyers Willing To Pay For Subscription Services
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Automakers in recent years have explored using connected services to enable subscription-based features like heated or cooled seats and active safety features. However, a recent study conducted by Cox Automotive indicates that only a quarter of car buyers would be willing to pay for such subscription-based services for their automobile.
The market research firm surveyed 217 consumers in January of this year, all of which said they intended to buy a new vehicle sometime within the next two years. Of these participants, just 25 percent (or roughly 54 potential car buyers) said they would be willing to pay an annual or monthly subscription fee for in-car features, services and upgrades.
The vast majority (92 percent) of those surveyed said heated and cooled seats should be part of the purchase price of a vehicle and not baked into a subscription service model. Additionally, 89 percent said remote start and lane-keeping assist should be included in the purchase price, while 87 percent said automatic emergency braking should also be included. Safety groups such as the National Highway Traffic Safety Administration have called on automakers to begin offering more standard active safety features in order to improve traffic safety, but these concerns may go unheard amid the auto industry’s shift to more profitable subscription-based models.
GM is a bit ahead of the curve when it comes to subscription-based vehicle features. It’s been offering its OnStar service through a subscription-based model since its inception and also offers subscription-based 4G LTE Wi-Fi services in OnStar-equipped products. Cox Automotive says that many consumers recognize stolen vehicle tracking and in-vehicle wi-fi are typically offered through subscription models and “exhibit some willingness to pay extra,” for these features.
Some car buyers surveyed said they would also be willing to pay for over-the-air updates than can increase a vehicle’s horsepower or torque – something that is becoming more common amid the industry’s shift to electric vehicles. OTA updates will also be offered on EVs that can increase the usable range of its battery.
GM is hoping to increase profits by offering a wide variety of in-vehicle features through a subscription model – a strategy that will be enabled by its new connected Vehicle Intelligence Platform and Ultifi end-to-end software platform. The automaker’s own internal research goes against Cox Automotive’s, with the automaker saying its customers are eager to bundle vehicle features together in monthly subscription models. GM’s own survey on customer reactions to subscription services included thousands of participants – more than Cox’s rather low sample size.
“Our research indicates that with the right mix of compelling offerings, customers are willing to spend $135 per month on average for products and services,” Alan Wexler, GM’s senior VP of innovation and growth, told TechCrunch in an interview last year.
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Sorry but I don’t feel that after purchasing a vehicle I should still be nickel and dimed for certain features. XM radio fine. Subscription for heated and cooled seats or safety features? Hard pass.
Even updating maps should be free. Auto makers have to update maps on a continuing basis to install GPS systems or Super Cruise in new cars. Pay your extra $ for that feature, then it should be done – an over the air update of maps costs auto makers nothing. Nothing. They update maps anyway, and sending out an update involves an employee pushing a button. We get software updates on personal computers and phones, no charge. Eventually, updates to cars will also be free. In the meantime, GM will make money on OnStar map updates for Super Cruise, and later, Ultra Cruise. So, buy GM shares. With any luck the share price will increase enough to cover the cost of any bogus subscriptions they charge for….
Has GM specifically stated what features will be part of the subscription service? I haven’t seen anything that would suggest they plan to charge for heated/cooled seats.
I can understand advanced onstar capabilities being a monthly fee, especially if they expand on the capability of Super Cruise. If they’re providing extra benefit and advancement I’d consider. However, if I’m expected to pay a fee to use the features I bought, that would be problematic.
It will be a fine line. BMWs need to charge for connecting your phone to the car would be unacceptable.
So before so many jump to conclusions, let’s find out what GM subscriptions GM intends to charge for.
I am a loyal GM owner but if they plan to go subscription for the things I enjoy today it will be a cold day I will pay them to use what is already in my car.
Here is my take on this. Anything like remote start or unlock. cooled and heated seats and wheel etc. Things we already enjoy in our vehicles now should remain part of the package when you buy. Most should be standard.
Now any new tech or options that could be added over the air should be offered as a purchase not a subscription. I will pay more for an option and not at all for a subscription. I buy I don’t rent.
Safety things need to be hands off. They should be standard as people often buy based on these.
Performance packages would be a nice addition you can make them a subscription with the option to buy. That way you could try it out and then if you like you buy.
I have already too many pay to play things now and will not add more.
If you are going to bleed people like this you had better cut the price of the cars much.
I agree with what you’re saying. But what if the 2023 version of whatever car came out had all the features you would normally have optioned for included in the base price. The only difference is there are monthly fees associated with turning them on? There’s two sides of this. One is automakers simplify manufacturing. With EVs as Tesla has shown you can pretty much have identical cars (sans color) coming down the line. Second it also helps with resale value. You willn’t have used cars sold in the north that were previously down south with no heat seats.
I have to imagine from a manufacturing standpoint puting in a heated seat/steering wheel in is not a big difference than putting a non heated version it. But the supply chain, logistics, inventory cost are a lot larger on multiple SKUs.
I think the question is could you outright buy the feature(s) and what happens when it’s sold?
What happens is I buy the car out right with the options I want or pay to turn on the options I want.
The point being I am not paying never ending monthly for the right to use what is in my car.
What happens is when I sell the car the selling point is that is is a fully operational car so the resale should be in my favor for buying the options out right.
It is the difference from buying a house or renting an apartment. I want the equity back on the sale.
They can build them anyway they like but they had better give me a buying price for my options and not just a subscription.
It is like Onstar. If it were a one time payment fine but I will not pay monthly.
I buy nothing but GM but I will move to the company that will let me pay out right for my options and not just rent them.
This is the auto industry tying to copy the tech industry. Many will make you pay and pay and pay.
One of the reasons I do Apple is not because I am a Apple disciple. But I buy my lap top, I buy my apps and with the price I pay they give me yearly updates and new operating systems for free unlike MS who wants you to buy a new system every couple years.
It is bad enough for Sat TV as it is and Sat radio.
I refused to be nickeled and dimed.
Microsoft updates are free from Windows 7 to 11. Other apps are also upgraded for free. Apple equipment is much more expensive for the same hardware that Windows users need. I know because my friend services both and knows the big difference.
Not when you have to buy the next windows. Also it is much more buggy.
I have upgraded 3 operating systems for free. The regular updates are also free.
GM researchers found customers would pay up to $135 per month for the right mix package! Pfffft!
You can make them all the same and option it permanently. I have an oscilliscope that does that. But to pay monthly for heated/cooled seats, remote start, etc. Nope, I WILL go somewhere else. Toyota discovered buyers will walk for pay for remote start. I get it if it requires a net connection to do something like supercruise, sure. But heated seats. NO.
That makes all of them more expensive, and eliminates the entry point buyers who just want the least expensive new vehicle they can get. It also makes them all more expensive to repair with all of the extra stuff in the way. No thanks.
Although I vehemently oppose these click-bait mobile app style business practices , I could only understand something like this in a LEASED vehicle. In a lease, you are only essentially renting the vehicle. If I purchase a vehicle outright that has hardware and all the necessary equipment already installed, I’m not going to pay a subscription fee for the privilege to use something that I already own. That’s not “subscription service”, its ransomware. I’d rather buy a toggle switch & relay and wire my own switch. Just like to don’t play click-bait mobile games and app, I will NEVER purchase a new vehicle from GM or any automaker who pulls this kind of crap. To echo a previous commenter, GM can GO TO HELL and take all their woke bean-counting employees with them. Whatever happend to guys like Ed Cole, Bill Mitchel, John Delorean & Bob Lutz?
Looks like you will be walking or buying a schwinn. Every manufacturer is talking about or has started to implement this, it isn’t just GM, they are a little behind terms of this strategy. I can see the pluses and minuses to both sides. Updated would be fantastic, paying regularly for a feature not so much but being able to easily turn it on and off depending on need and use would be great. The will probably have an upfront costs to have it stay with the vehicle for life or through out ownership for a reduced cost. Like if you pa up front it is half the costs than paying for it for 5 years…
The whole ‘connected car’ strategy, which has been portrayed as a way to improve a purchaser’s vehicle and add features could also be used to take them away. I’d be very careful with what I sign when purchasing a new gm vehicle.
My opinion is that the American public is poor from service charges and as a result they don’t have sufficient savings, haven’t invested for their retirement, or paid off their homes and they are indebted to far too many entities. Fifty years ago, TV was free and folks listened to the radio for free. Today Sirius/XM or Spotify or any of the other music services require a subscription. Likewise, satellite or cable TV firms impose hefty monthly charges while still inundating viewers with commercials. We pay fees for access to the internet and then fees to read the content on the internet. Our cell phones have expensive charges plus we often still pay fees for a home phone. We pay for data plans and hot spots and protection plans on our phones. We pay for antivirus software. There are fees for Netfix or similar services, fees for home security. Believe it or not, folks pay a subscription fee for their doorbells. There’s a monthly charge to exercise (at a gym) and the list goes on and on.
I think the last thing we should accept is a monthly fee to use the heated seats in our car or the intelligent cruise control. Instead of accepting more and more fees and becoming poor serfs, we should reject them, invest in or futures and make ourselves rich instead of the Mary Barra’s of the world.
I read today that a major news network is ending their fee based service because nobody subscribed. We’d all be better off financially if that happened more. I think Americans are handing over all their hard-earned wealth to companies for service charges and we need to become much wiser. If connected car systems are allowed to thrive, gm and others will impose more and more fees and make operating a vehicle freely and without a subscription a thing of the past.. I don’t think most Americans can truly afford that.
I still use only rabbit ears. I have saved 10s of thousands over the decades by not paying for cable. Maybe close to a hundred grand by now. I hear some people pay 200/mo for cable tv. Crazy.
I also don’t get the hate for Mary. If you want to talk about CEO’s that are well compensated, lets talk musk eh?
mkavt,
I think that “hate” for Mary Barra comes from two places: According to GMAuthority, she was paid $40.3 million last year, second only to Nvidia CEO, Jensen Huang, among CEOs of American companies. So, she’s highly paid, yet, unlike so many highly compensated CEOs, she is not growing her company and really winning in the marketplace by increasing its footprint and market share. Rather she’s continued to shrink it by exiting markets, exiting product categories and closing more and more plants. The company’s market share has now declined to 13 percent. Today’s gm has become a niche’ automaker competing only in the most lucrative of categories like big SUVs, pickups, and crossovers. That may seem smart but instead of a company that fights for every customer and competes everywhere, like Toyota, the GM of today has retreated to only the spaces where easy money can be made so as to remain profitable. Retreating to only the most profitable sectors obfuscates the lingering and unaddressed issues with competitiveness at today’s gm. And tomorrow’s gm, thanks to Mary’s edicts will be an EV-only company. The gm tagline is “Everybody In” but suffice it to say, not everyone wants to get in for the trip to where dictatorial Mary wants them to go; some would prefer choices. For this, and other reasons folks like me who initially saw Barra as a breath of fresh air and appreciated her candor have now soured on her leadership.
As for Musk, the man invented a car company which nobody had done in the US for over 100 years and he not only succeeded but he disrupted the industry worldwide. Though many have tried to start a car company from scratch like Tucker, Bricklin, and DeLorean, the South African-born Musk was the first to succeed. For that, I begrudge him nothing. He earned it. As I see it, he’s building an empire. Barra, on the other hand, is continuing the gm retreat and is dismantling an empire, a once almighty company, that other great men had worked so hard to build. And she’s getting paid $40.3 million a year to do it.
Musk did not start tesla. Discussion cannot even be had if you are not aware of that. As to pay, just google highest paid US CEO’s. Barra is not even in the top 10 if you consider stock.
Mkavt,
Fair enough on the genesis of Tesla. Elon was not involved with the company until seven months after its founding. I don’t think that alters the validity of my point though. He’s turned it into an international automotive brand, brought employment to many, and disrupted the industry. Others have tried to create car companies from scratch. Others have failed. For what’s been accomplished, I personally don’t have an issue with the money he’s made.
I do have an issue with all the CEOs of great American companies that’ve paid themselves handsomely while running their respective companies into the ground. I couldn’t even begin to list the American iconic brands that are gone because of poor management and in virtually every instance, the leadership got rich for the destruction they wrought. We’ll see what Barra leaves in her wake. So far though, gm is greatly diminished in terms of its market share and product portfolio here in the US compared to when she arrived and in the number of international markets they compete in. If her gamble on all-EVs fails, the company will be mortally wounded.
You may love her but I was merely trying to explain why others, including myself, do not. Lest you think, as many reflexively do, that her gender has anything to do with it, I initially thought she was exactly what gm needed and was impressed by her commitment to safety and to quickly fix, rather than ignore and bury product flaws. I still admire how she rose to the occasion and dealt with the ignition switches that were killing people. Much time has passed since then though and as she keeps trying to shrink gm to prop-up profits, rather than growing the company, I’ve lost all admiration for her.
I agree with some of this, my biggest complains are GM’s elimination of all sedans and their commitment to an all EV lineup. Where I come from we call these “commitments” putting all of your eggs in one basket. These are huge gambles, plus it effectively narrows GM’s broad appeal to the overall market. They should offer a competitively priced sedan and how about something to compete with the Jeep Wrangler and the Maverick?
“GM is a bit ahead of the curve when it comes to subscription-based vehicle features.”
BMW has been selling adaptive headlight, CarPlay, integrated dashcam, etc. subscriptions for several years now, particularly in Europe.
Waste of money, you can keep the touch screen as well, I don’t need that either!
In most cars, you’re going to need that touchscreen. You may not want it, but that is where they are putting a lot of settings.
It’s just another money grab, plain and simple. And the whole idea sucks for consumers. Crap.
I expect that eventually you’ll only be able to subscribe to or lease the whole car. It won’t happen overnight, but like with everything else they want you on a subscription service.
Pass!
I hope whomever did this research saying they’d pay $135 a month is different from those who did the Aztec research! This wreaks of a bean counters eyes glazing over with the thought of extra revenue. Why should I pay a monthly fee for heated and cooled seats?
Hey! I loved my Aztek.
I would take it all the way to pay to start.
I just want my S-10 and Chevelle back in production! Simple and sized correctly! And with only 2 doors!!! Don’t need abs, power windows, self drive or any of unnecessary stuff they put in cars now! Also want my manual transmission back!
Even updating maps should be free. Auto makers have to update maps on a continuing basis to install GPS systems or Super Cruise in new cars. Pay your extra $ for that feature, then it should be done – an over the air update of maps costs auto makers nothing. Nothing. They update maps anyway, and sending out an update involves an employee pushing a button. We get software updates on personal computers and phones, no charge. Eventually, updates to cars will also be free. In the meantime, GM will make money on OnStar map updates for Super Cruise, and later, Ultra Cruise. So, buy GM shares. With any luck the share price will increase enough to cover the cost of any bogus subscriptions they charge for….
I agree on the maps. I have refused to pay for any map upgrades. We are paying hundreds of dollars for navigation…it should continue to navigate!
I’ve received multiple letters offering me the sale price on navigation updates on two of the GM cars I own with navigation. They all wind up in the trash. Never again will I pay for a navigation system that they don’t update for what I initially paid for the system. I’ll use Google Maps or Waze.
To me, subscription services are like credit cards……….use them wisely!
I am not the biggest fan of connected cars for one reason. It allows a car company to track you and log your driving habits. I owned a 2017 ZL1 Camaro and drove it pretty hard and once drove it into the upper triple digits, on a deserted stretch of toll highway. After an email contact about GM auto insurance I was told I was ineligible for coverage and I am sure it was related to my driving style in the ZL1. The Camaro is marketed as a high performance car, but drive it the way it was engineered you may be penalized for doing so. When my Z06 arrives I will research a way to disconnect any feature that tracks my car and I will go to the dealership if my car needs an update. Just my opinion of course.
If the mechanical and electrical parts to provide these options, and it was buried in the cost of the car, then charging a subscription fee to activate what you paid for is nothing short of insanity.
Just a thought, if the MSRP is $2,500 less, for example, and heated seats and other features are extra on a subscription, it’s up to the consumer to do the math. Please think about it inversely. It’s buying a lower trim level for lower MSRP, and if you want to add onto it, pay a subscription. If not, buy a higher trim with the features included. Enjoy capitalism and choose wisely.
I participated in the GM survey on subscription services. It also asked how much you would be willing to have an item permanently. I knocked down the idea of subscribing to anything that is “attached to the car”…seats, brakes, lights, whatever. Doesn’t make sense to me…Heat in your seats is not someone providing a service (those seats could end up costing 1,000’s of dollars); On-Star is..someone answers the phone, tracks your vehicle. Maps are updated all of the time, no one is providing a service specifically because I asked them to. Also, what other cars manufacturers are we talking about (besides the ones mentioned in Europe). I have been researching many makes of cars and this is the first I have heard about paying subscription fees for heated and cooled seats! Unless they keep that a secret until after you purchase the car.
This discussion reminds me of the Ole, Sven and Lars story where they were all close friends and then the day came when Lars passed away. Ole, being well off, asked Sven to buy a tuxedo for Lars to be buried in along with purchasing some other arrangements for the funeral that he would pay for. All was well until a month after the funeral when Sven came to Ole and asked for more money to pay for the tuxedo. Ole was puzzled because he thought all the bills were paid but gave Sven the money. Another month went by and, again, Sven came to Ole for more money to pay for the tuxedo. Lars was concerned and asked Sven why he kept needing more money for the tuxedo and Sven said “vell they charge a rental fee every month to use that tuxedo!