A new way to monetize vehicles

In the near future, the options you want on your car, from heated seats to cruise control, will now be provided in the form of a subscription.

Before, cars that were equipped with luxurious options like heated seats were sold separately from cars that didn’t have them. Not only did the model help automakers vary their costs on every car they produce but also gave one vehicle higher value than another. Those that liked the car wanted the luxurious options couldn’t install it in their vehicle easily and probably needed to dish out a lot more money just to have those luxurious options installed.

And for the used car buyers that got to buy the car for a much lower price, they got lucky.

In an age where the auto industry is stagnant and struggling with finding ways to grow their business, automakers are looking for more ways to monetize their customers from both the new car buyers and the used car buyers. In the 2010s, Tesla came into the scene. Besides being the pioneer of electric vehicles, Tesla also found a way to monetize its customers. By giving them the option to gain access to FSD and Autopilot at any time of their tenure, Tesla has found a way to monetize its userbase but as of April 2020, Electrek announced that Tesla will make their self-driving offering as a subscription. This gave the rest of the auto industry an idea of how they can monetize their customer base.

Three months later, RoadShow confirmed that BMW is looking into providing subscription offerings to its users. In the article, it described how every car will be equipped with luxurious features, making the production of the car more expensive. At the same time, it does help smoothen the production process. Through their digital platform, customers can subscribe to certain features that they want to use in their vehicles and cancel features that they no longer deem valuable. This not only helps customers save money but also gives BMW more ways to monetize its used car buyers as those buyers will not only be paying for service.

With “vehicle as a service” becoming a new thing in the auto industry, it will be interesting to see what exact specifications customers will add to their vehicles and how the profit margins will look for automakers. Also, it would be interesting to see how consumers feel about this new model.

Overall, it’s a very exciting frontier in the auto industry and I can’t wait to see how my credit card bill will look after the experience (just kidding, I’m a lot less lavish in my spending).