In spite of the recent, and apparently calamitous, fall in the number of Netflix subscribers, the global motor industry is still trying to move consumers to a pay-monthly model for major options and vehicle functions.
In the US market, General Motors has admitted that it expects consumers will spend an extra $135 per month (€128) on subscriptions for extras and add-ons, and that's above and beyond the usual monthly repayments on a car loan or a PCP deal.
It’s part of a move towards subscription services that GM expects to net it between $20 billion and $25 billion annually by 2030, a time when the car maker expects to have some 30 million vehicles on the road equipped with internet connections and the right software to allow for regular subscriptions.
Europe is not immune to such ideas. According to PricewaterhouseCoopers (PwC), the number of cars in use in Europe is expected to hit a peak of about 270 million or so by 2025, and then steadily decline thereafter.
Given that decline, car makers are keen to sniff out opportunities to sell us digital services, which is why we hear so many car companies now refer to themselves as “mobility providers”.
There should be no surprise in this – PwC also estimates that the market for connected car services will be worth, by 2030, a massive $81 billion.
Already, across several different manufacturers, you will find “buttons” on touchscreens for certain functions – such as satellite navigation or even heated seats – that will lead you to a “contact your dealer to have this function enabled” screen. It’s not a massive leap to imagine that screen replaced by one that allows you – requires you, even – to click a button to pay the car company a recurring monthly fee to activate the function direct from your touchscreen.
Hot water
Consumers, it seems, simply do not like this idea. Already, BMW has found itself in hot water for trying to charge an annual fee to allow the use of Apple CarPlay on its cars' touchscreens. Car buyers, and consumer groups, pushed back and the charge was dropped, but that seems increasingly more like reprieve than victory.
Motor industry analyst firm Cox Automotive has polled US car buyers, and found that 75 per cent of them are resolutely against the recurring subscription model. “Three-quarters of consumers surveyed by Cox Automotive said they were not willing to pay an annual or monthly subscription fee for most items on their next vehicle. Rather, they expect most features and services to be included in the upfront sales price,” said the report.
Wriggle room
However, there was some wriggle room for car makers within the data – car buyers apparently feel that it’s okay for some systems and functions to be upsold by a subscription mode, such as in-car wifi and stolen vehicle tracking. Even so, consumers are wary.
The consumer organisation also warned that car makers are increasingly opening themselves up to data privacy issues
The BEUC, the European Commission’s consumer advocate organisation, has expressed general concerns about the future of subscriptions for equipment.
“It seems the hardware will have to be built into the car anyway, irrespective of whether you or I opt for the features, or not,” says a BEUC spokesman. “ So what happens when the initial price drops and we would en masse decide not to subscribe? Might we be nudged or incentivised into taking the subscriptions? And, if so, how?”
The consumer organisation also warned that car makers are increasingly opening themselves up to data privacy issues, thanks to the ever-increasing need for the kinds of connected software on which a subscription model depends. “Car makers do not simply act as gatekeepers for the access and use of consumers’ data” said the BEUC. “The emergence of application platforms and the growing involvement of technology giants pose serious concerns to how this data will be used.
"Recently, Stellantis concluded an agreement with Amazon to equip its vehicles with software-defined platforms and use Amazon cloud services to store data. Everything that will happen inside and outside the car, including payment services, but also the connection with the consumer's smartphone and home-connected devices, will be controlled by Amazon, in what looks like a data dystopian scenario. This is bad for consumers' privacy, this is also bad for the competitive structure of not only in car market, but also other related markets such as transport and logistics, as Amazon could use the data harvested to reinforce its market power across numerous markets it is active on."
