Could OEMs “lock in” brand loyalty with subscription services?

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As automakers increasingly turn to the controversial concept of subscription services, vehicle connectivity specialist VNC Automotive wondered if consumers were against the idea of ​​subscribing to vehicle features. as many think.

“Consumers are no stranger to the subscription model, which has become an integral part of many people’s daily lives, with millions of people regularly paying to use services such as Netflix, Amazon Prime and Spotify, as well as s This familiarity can ease the transition for manufacturers as they seek to recreate this pattern inside their vehicles.

VNC argues that rather than paying for an expensive option at the point of sale, customers had the flexibility to enable or disable options based on their needs and budget. Heated seats will not be necessary in the summer but could be activated for winter driving.

There is an obvious tension between OEMs who want to maximize their revenue and customers who want to use hardware already installed in their vehicles. But the subscription model could deliver a personalized and dynamic driving experience, assuming OEMs streamline the payment structure beyond the “dumb” annual fee.

Modern vehicles don’t come to the dealership as often as OEMs would like, thanks to longer service intervals. But the regular software updates offered by OEMs could be called “digital valets”, improving existing features and adding new ones. Such “refreshments” should strengthen the relationship between OEMs and used vehicle owners.

Subscription features also make the car more configurable for subsequent owners, allowing them to specify features as they would with a new car, but without the associated high purchase price of a new vehicle.

Additionally, customers switching vehicles could see their subscribed features move with them, with options enabled based on each driver’s subscription plan. These packages represent an opportunity for OEMs to “retain” customers to a personalized subscription, encouraging brand loyalty.

Peter Galek, Director of Product Engineering at VNC Automotive, said: “Exciting new features or upgrades to a vehicle are a strong incentive for traditional vehicle users to subscribe. Such models offer OEMs the best chance of bringing more features to market throughout the life of the vehicle.

A warning to OEMs – beware of the temptation of subscription services

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