Car subscriptions? Automakers aim to bring Netflix model to the features you love

We've all seen the financial magic of subscription models, working wonders in the world of streaming with giants like Netflix and HBO Max. But here's a question: could this same pay-as-you-go approach revolutionize the car industry?

Photo: Facebook - BMW

In BMW's world, they thought, "Why not?" but not in the way you might expect. They weren't selling cars on subscription, but something smaller – heated seats.

Photo: Facebook - BMW

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In a bold move with their 'Operating System 7,' launched back in 2021, BMW floated the idea of activating car's heated seats for a cool $18 monthly subscription, as reported by Forbes.

Photo: Facebook - BMW

Ironically, customers who wouldn't blink at dropping $100,000 (about 100,000 euros) on a BMW balked at the idea of shelling out $18 monthly just for toasty buns.

Photo: Facebook - BMW

The pushback? Heated seats have always been a standard or add-on feature, never a subscription service.

Photo: Facebook - BMW

Faced with customer backlash, the German automaker had to hit the brakes on this subscription idea and steer clear of microtransaction territory.

Photo: Facebook - BMW

“We thought that we would provide an extra service to the customer by offering the chance to activate that later, but the user acceptance isn’t that high. People feel that they paid double – which was actually not true, but perception is reality, I always say. So that was the reason we stopped that," said BMW executive Pieter Nota at Munich's IAA Mobility conference, as reported by Autocar.

Photo: Facebook - BMW

Pieter Nota's point is this: paying for heated seats as a car add-on would actually cost more than BMW's proposed subscription. But, customers prefer a one-time hit to their wallets over a recurring charge.

Photo: Facebook - BMW

This wasn't BMW's first subscription faux pas. Enter Apple CarPlay. Here, customer complaints hit even higher decibels.

Photo: Facebook - BMW

Back in 2019, BMW made waves by announcing a $300 fee for a three-year Apple CarPlay subscription. But after just a few months and a chorus of groans from customers, they dialed it back to $80 per year.

Photo: Facebook - BMW

The issue? Other cars, even less fancy ones, were offering Apple CarPlay as a standard feature. BMW, reading the room, axed the charge that same year.

Photo: Facebook - BMW

When it comes to in-car subscriptions, Tesla is a frontrunner. For instance, it charges $99 per year for advanced connectivity, that includes features like live traffic visualization or video streaming.

Photo: Facebook - Tesla

Their Full Self-Driving (FSD) system, an advanced driver-assist feature, comes with a hefty price tag – either a one-time payment of $12,000 or a $199 monthly subscription.

Photo: Facebook - Tesla

The 2020 Volvo XC90 offers some great features like being able to start the car or unlock it through an app on your phone. The company offers a free trial, but if you like it, you have to pay $200 per year, according to CBS News. Many other companies have similar ideas.

Some succeed, some backfire, but it's clear: the car industry is inching towards subscriptions. BMW, though, might just think twice before stepping on that rake again.

Photo: Facebook - BMW

A 2023 report by Fortune Business Insights found that the global vehicle subscription market size was worth $2.11 billion in 2021. However, that is slated to skyrocket to $172.47 billion by 2020. General Motors projects subscription fees to bring in as much as $25 billion a year by 2030.

Photo: Avinash Kumar / Unsplash

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