Car companies want to make billions by charging monthly fees for features like heated seats, but buyers won’t pay up

The 2022 Lexus IS sedan.

Car companies expect to make billions charging customers recurring fees for vehicle features. 
Today, carmakers offer subscriptions for automatic high beams, remote start, and other functions. 
Manufacturers see dollar signs, but buyers aren’t thrilled about the idea. 

How would you feel about paying $5 each month for the ability to lock and unlock your car from a distance through an app? What about a $25-per-month charge for advanced cruise control or $10 to access heated seats? What if those charges continued long after your car was paid off? 

As vehicles become increasingly connected to the internet, car companies aim to rake in billions by having customers pay monthly or annual subscriptions to access certain features. Not content with the relatively low-margin business of building and selling cars, automakers are eager to pull down Silicon Valley-style profits.

But unlike with Netflix, you won’t be able to use your ex-girlfriend’s uncle’s login in your new BMW. And car buyers don’t seem too thrilled about the idea. 

For automakers, the advantage of this model is clear. Not only do they get a stream of recurring revenue for years after an initial purchase, they can hope to maintain a longer-term relationship with the customer and build brand loyalty, said Kristin Kolodge, vice president and head of auto benchmarking and mobility development at J.D. Power. 

This approach can also allow carmakers to streamline manufacturing by building cars to more uniform specifications, Mark Wakefield, who runs the automotive and industrial practice at the consulting firm AlixPartners, told Insider. Down the line, owners can add on the features they want à la carte. 

It’s all made possible by the advent of over-the-air software updates, which were pioneered by Tesla around a decade ago and are now entering the mainstream. Today’s vehicles are more internet-connected and computerized than ever before, meaning …read more

Source:: Businessinsider

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