The subscription model is located in his evolution phase, said Stephanie Brinley, associated director of Automintelligence at S&P Global Mobility. “We try to find out what consumers are willing to pay, how much they are prepared, how they want to bundle it,” she said.
Despite the first resistance, car manufacturers have not yet given up. Instead, they roll out brand new technology and functions in the hope of tempting drivers to pay for subscriptions.
“They are running to that new technology,” said Daniel Ross, senior manager of Industry Insights with Canadian Black Book. “It is more about what is new and what they have never had before.”
Ross said that if newer technology comes out, there are more options for car manufacturers to release new generations of cars with updated software. And that is one of the pitches for customers to subscribe, he added.
“If you want that kind of technology that is advanced, that’s the newest era, that’s something you can tell your friends about, this is the way you pay for it,” said Ross.
As technology scales, functions can become cheaper
Brinley said that car manufacturers build a route map to help this in-car technology and these functions scale and these functions to make it more affordable for consumers in the long term, while they keep the personalization in the core.
“Once you have developed the platform and service, the margin is very high,” said Brinley.
“The fact that it is connected is not really the element that consumers are being enthusiastic about,” she said. “What does that connectivity do for you as an owner?”
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