Cruise control or a larger range in the subscription. Manufacturers can make billions from this

You can not only buy a car, but also retrofit it in a subscription?

Selling additional car functionalities in the form of monthly and annual subscriptions is not new. For several years, this has been the way to sell emergency call systems, a private concierge service or subscriptions for navigation and car Internet connection.

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If it works, why not switch to a subscription with functions such as cruise control, seat heating or opening the car via a smartphone? According to the authors of the JD Power report, this is the future that awaits us. Car manufacturers are no longer satisfied with low-margin car sales, so they see a great opportunity in forcing their customers to pay monthly or annual subscriptions for access to certain features.

It is hardly surprising that they want to take advantage of such an opportunity, because this sales model offers a lot of opportunities. Not only does this provide a stream of recurring revenue for years after the first car purchase, but it also offers hope for building customer loyalty to the brand, according to Kristin Kolodge, an analyst at JD Power.

Importantly, this sales system does not require additional expenditure, because most new cars already communicate wirelessly in order to update the software. Tesla has had this functionality for a decade.

Lexus, Toyota and Subaru are encouraging owners to pay for the convenience of being able to remotely lock or start their car with an app. In some BMWs, you can pay to unlock automatic high beams that dim for oncoming traffic. In 2020, BMW introduced the idea of ​​heated seats and steering wheels with a "pay-as-you-go" option. General Motors and Ford, on the other hand, offer subscriptions for their hands-free highway driving systems.

When will we see a new reality?

According to the authors of the report, we will have a period of experimentation and data collection, for which car owners will be willing to pay, and what subscription fees will irritate them. An example of this is the decision of BMW, which in 2019 gave up charging $80 a year for Apple CarPlay.

JD Power's survey published in January found that 58 percent of of people using the car manufacturer's smartphone apps would not pay for them if they became payable. This is probably partly due to the fact that they are still quite simple and require refinement.

How much will producers earn from subscriptions? Stellantis, Ford and GM hope that the introduction of subscriptions will provide them with $20 billion in annual revenues by 2030! As you can see, we are talking about large amounts, so the question should be when, not if, subscriptions will become a common practice in new cars.