“Car manufacturers are always exploring new ideas for ownership models, and I am confident we will see more concepts emerge in the years to come,” says Scott Kunes, Chief Operating Officer at Kunes Auto Group. However, he notes that “subscription models, are not new. They’ve been around for at least ten years, from flex buy to car-sharing and upselling features.”
Private vehicle ownership is on the decline, with car-sharing and subscription-based models on the rise. Subscription-based features have similarly flourished. Automakers are now looking to profit by charging customers monthly or annual subscription fees to access certain features within the vehicle. Instead of immediately committing to a product, consumers can try out different technologies and services to discover what they prefer.
This has been made possible by an increase in car internet connectivity, which enables over-the-air (OTA) software updates such as those pioneered by Tesla in 2012. Car companies can now add new capabilities and tweak vehicle software from a distance.
OEMs that have rolled out a feature subscription model include Audi, BMW, Cadillac, Porshe, and Tesla. “Next up for the automotive industry are microtransactions—software subscriptions added to monthly car payments for services like heated seats, Netflix and more,” says Joe Fuca, Chief Executive of Software-as-a-Service (SaaS) growth company Reputation. Fuca has spent more than 30 years in the tech sector.