The growing “features on demand” (FoD) trend in the auto industry is upsetting American car owners, who are growing increasingly displeased with having to pay for extra car features via subscription. 69 percent of respondents to a recent survey indicated that they would probably switch car brands if they were forced to pay monthly fees for features like heated seats.
Yahoo Finance reports that according to a recent Cox Automotive study, while 75 percent of respondents agreed that FoD will increase automakers’ revenues, 69 percent of respondents said they would probably switch brands if some vehicle features were only available as subscription services. The fact that automakers are relying on subscription services to generate billions of dollars in revenue presents a significant challenge.
Elon Musk shades his eyes in front of a Tesla ( Maja Hitij /Getty)
“I think the general view is that this isn’t going anywhere because most [automakers] have seen this as a significant revenue source and that’s not just luxury brands,” commented Alistair Weaver, editor in chief of the automotive research firm Edmunds, in an interview with Yahoo Finance.
The recent introduction of subscription pricing for heated seats—a feature that comes standard in the majority of BMW vehicles—caused widespread backlash. BMW enthusiasts and auto industry observers expressed their outrage at having to pay extra for a feature that was already built into their vehicles.
Similar payment models are used by Tesla for add-ons like Autopilot and the beta version of fully autonomous driving. These, however, are software improvements rather than physical features. Automakers like Mercedes and Toyota have also begun using subscription-based feature plans. Mercedes charges extra for more power on its EQ-series electric vehicles, whereas Toyota charges extra to access certain features on its app.
Subscription fees have been incorporated into automakers’ financial models and projected future earnings. Wall Street analysts and investors believe these extra funds will increase future profits and stock prices.
To make these services appealing to owners, automakers believe they must strike a balance. Toyota is seeing some success with its strategy of providing free trials of these services. In the Cox study, 65 percent of participants said a free trial period for add-on features would encourage them to think about staying with a brand.
“I don’t think [features on demand] is going away,” said Weaver, “and also as the cars get more and more sophisticated, get more and more functionality, then it just feels like a natural progression.”
Read more at Yahoo Finance here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan
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