Carmakers are constantly looking for new sources of revenue, and now that the auto industry is desperately trying to emulate the tech industry, carmakers like BMW, Volvo and Stellantis (to name a few) are boldly putting the use of certain features behind subscriptions. But the new practice is already angering a large portion of new-car buyers and even dealers. The data is in: A recent survey says more than two-thirds of car buyers oppose subscriptions for in-car features, and would vastly prefer the old-fashioned model of paying for an option once and keeping it forever.
In case you missed it:
- Gordon Murray V12, Manual Ferrari 599, MotorWeek Gallardo Retro Review: The Best Automotive Videos on YouTube This Week
- Why Most Car Companies Don’t Use Stainless Steel Bodies
- Toyota Celica GT-Four, Chevy Chevelle, Mazda RX-7: The Dopest Cars I Found For Sale Online
The survey was conducted by the research team at Autolist, which published the results last week. Autolist surveyed 1,200 people currently in the market for a new car; a full 69 percent of respondents said they would not pay into recurring fees. While the number of those opposed to subscriptions doesn’t seem as high as you would think, it still accounts for the lion’s share of respondents. And while Autolist found that people in different age groups have different appetites for in-car subscriptions, those breakdowns are a little counterintuitive.
To begin with, younger buyers are more likely to be unbothered by subscription services. Gen Z shoppers are more tolerant of subscriptions compared to older buyers, including Millennials, Gen Xers and Baby Boomers. Autolist found that subscription tolerance decreases as age increases, so the older the buyer, the less likely they’re willing to sign up for a subscription for something like heated seats.
Given the prevalence of monthly recurring fees in many aspects of tech-powered life these days, that tracks. One more subscription every month probably seems harmless to Zoomers, as Autolist CEO Corey Lydstone explains:
“Younger shoppers have grown up in an age where you subscribe to everything: music, gaming, entertainment, clothes and shoes, meals, etc. So the concept of paying a monthly fee for a feature on a car is a lot less foreign to them than it is to a Baby Boomer.”
Zoomers grew up in a culture defined by the gig economy, dominated by businesses that perpetually rent you access to digital services. That may explain why respondents to Autolist’s survey felt differently about subscribing to hardware and vehicle-performance options than they did regarding software and infotainment subscriptions.
Shoppers are much more likely to accept a monthly fee for entertainment features or software updates than for anything tied to a physical capability of a new car. The data says that 70 percent of buyers want to pay up-front for hardware like heated seats or adaptive headlights, and 69 percent want performance features to be purchased along with the car rather than accessed on a monthly or yearly fee.
By contrast, only 44 percent of shoppers think in-vehicle entertainment — such as streaming audio and WiFi features — should be included in the up-front cost. Again, that makes sense given how we all pay for TV and music today.
But one of the most notable findings from the survey was that higher-earning households oppose subscription services even more than lower-income households. Per Autolist:
For example, 57 percent of people in households making under $30,000 a year said they wouldn’t be willing to subscribe to features, while 10 percent said they would.
Of households making more than $150,000 a year, in contrast, 83 percent said they wouldn’t be willing to subscribe, while 6 percent said they would.
The findings make sense — saving money initially by signing up for a low monthly fee would naturally appeal to folks who might not be able to afford a one-time option price. But you would think well-heeled buyers would be unbothered by paying a monthly fee. It turns out that’s not the case at all, and Autolist says that carmakers could be putting off their wealthiest buyers by offering subscription-based options.
And that could have negative side effects down the line, when trade-in time comes. There’s no doubt that subscription services will be lucrative in the short term; the question now is whether they will be more harmful than carmakers predict in the long term.