New Survey Finds Consumers Hate This Latest Trend By Automakers

Imagine you’ve just bought a new or used car after months of researching, test-driving, and searching online.

It has all the bells and whistles you want: heated seats, Apple CarPlay connectivity, and even hands-free driving capabilities. You stretched your budget a little to get the one you loved, but now you’ve got years of enjoyment ahead of you in your sweet new ride.

And then the subscriptions start.

Those cozy heated seats? $20 a month. Wireless smartphone capabilities? That’ll be an extra $15 a month – or maybe a cool $150 a year. Hands-free driving on the highway? Better budget $100 a month for that one.

Welcome to the new era of connected cars.

While automakers have just scratched the surface in terms of offering features on a subscription basis, the ability to remotely turn on and off a wide variety of amenities and services on cars has brands salivating over the profits they could make.

That’s because the connected car is essentially an unlimited source of future income for automakers. No longer are they limited to just what the automaker can sell on the vehicle when it’s sold new – once – to the first owner. Now they can look forward to revenue from all of the car’s future owners for its lifetime.

Just how much money is at stake? Billions (yes, with a B).

Brands like General Motors (Chevy, Buick, Cadillac) and Stelantis (Jeep, Ram, Chrysler, Dodge, Fiat) have said that by 2030, they expect to generate as much as $23 billion and $25 billion, respectively, from subscription-based software and services.

Volvo, Volkswagen Group (VW, Porsche, Audi), BMW, Ford, and Tesla have all rolled out fee-based services in various global markets, including the U.S.

And it’s widely expected that the potential money left on the table will be too great for all other automakers to pass up.

But this enthusiasm for a lucrative new source of cash ignores one crucial element.

Consumers hate the idea.

In February of this year, Autolist.com polled more than 1,200 current car shoppers and asked them about their attitudes toward subscription-based features.

The results were clear: 69% of consumers preferred to pay up-front for features and services rather than subscribe; just seven percent said they were open to subscribing.

Moreover, Autolist found that higher-earning households are less open to subscription-based features than households with lower incomes. By the numbers, 83% of respondents in households making more than $150,000 a year said they were against this approach; meanwhile, 57% of households earning less than $30,000 a year said they were against subscriptions.

That’s an important distinction.

Brands that have been most eager to adopt this subscription strategy have been luxury brands that count higher-earning households as their core customer base.

And, the very types of features that automakers are looking to put behind subscription paywalls are the kinds that are often on the higher-end trims of a particular model, which bring in more profits per vehicle than the more stripped-down base trim.

Thus, automakers diving head-first into subscription-based features risk alienating their most profitable and subscription-averse customers.

Autolist’s survey did uncover some bright spots for brands with subscription-based dollar signs in their eyes, however.

For one, the younger the car shopper, the more open they were to fee-based features.

Just 42% of Gen Z consumers told Autolist they were opposed to this pricing model; that compares to 78% of baby boomers who said they opposed subscriptions. This means that as the pool of Gen Z shoppers in the market grows, so too will the number of potential customers for subscriptions.

This greater openness by younger shoppers makes sense, given that this is a generation for whom subscriptions are a very normal and common way to consume something, as opposed to older buyers for whom tangible ownership is expected.

And not all subscription features are created equal in the eyes of consumers, Autolist found.

When we broke down the type of feature into five buckets, we found distinct differences in how willing people were to subscribe to one type versus another.

You can find all the details here, but the short version is that things like heated seats or additional horsepower are seen by consumers as tangible elements of a vehicle – no amount of connectivity should add or remove them.

So they were far less willing to subscribe to those types of options; when it comes to in-car streaming entertainment, hands-free driving capabilities, or services like real-time traffic updates, there are signs that consumers might consider opening their wallets on a monthly or annual basis to use them.

Nevertheless, automakers have a long way to go to convince shoppers that subscribing to a feature is the best way to access it.

If more than two-thirds of consumers reject something, it’s a pretty compelling case for automakers to moderate their approach here.

With subscriptions inundating so many other aspects of our lives (entertainment, meals, clothes, etc.), cars – and the features they come with – seemed like the last bastion of actually owning something permanent without being nickel-and-dimed.

Only time will tell us how this trend evolves. In the meantime, subscribe to my newsletter to stay up-to-date.

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