Do Your Customers Suffer From ‘Subscription Fatigue?’

“A car is not just a car anymore,” what with all the available automotive telematics and subscription services.

So says Asutosh Kumar, director-automotive solutions at Tata Communications, a division of automaker Tata Motors (brands include Jaguar and Land Rover), referring to today’s so-called connected vehicles.

Subscriptions are lucrative for the business world in general and the auto industry in particular.

But there’s a seeming limit as to how many of those recurring-revenue services consumers are willing to pay for.

“We’re seeing a trend where people don’t want to subscribe to so many things,” says Maria Wieser, senior business developer at Zeekr Technology.

She joins Kumar for a panel session, “Monetizing the Connected Cockpit,” at the latest WardsAuto/Informa online AutoTech series.

A session question is whether vehicle subscription services are here to stay. The qualified answer is “yes” – but they’d better be good.  

Dealer Andrew DiFeo of Hyundai of St. Augustine (FL) tells WardsAuto that some consumers are rethinking their need for so many add-on services.

“We’re getting subscription fatigue as a society,” he says, noting that fees can add up.

“On one hand, we are saying vehicle affordability is one of the strongest headwinds of the industry,” DiFeo says. “On the other hand, the industry is pushing the charging of those extra monthly fees. There’s some pushback from consumers.”

Subscription and connected services include stolen-vehicle tracking, over-the-air updates, remote diagnosis, multimedia entertainment, live-agent navigation, concierge assistance, Wi-Fi, satellite radio, real-time traffic reports and enabling smartphones to start, lock and unlock vehicles.

All for a price.

“It’s death by a thousand fees,” says Karl Brauer, executive analyst for iSeeCars.com, an auto marketplace website. He’s a bit skeptical about subscriptions.

“It’s fascinating to watch automakers struggling with how much to charge and what to charge for,” Brauer tells WardsAuto.      

“It’s a major pain point now,” acknowledges AutoTech panelist Alex Leonov, digital services manager for Volvo’s North American unit.

Attempting to ease that discomfort, Leonov offers this advice to dealers and OEMs on how to make subscriptions – a relatively new endeavor for the retail auto industry – more palatable to the public:

The auto industry is trying to figure out the right model, Leonov says.

Dealer DiFeo says subscriptions are easier to sell if consumers perceive them as offering tremendous value. Safety-related offerings rank among the most popular.  

“But if it is something like in-car Wi-Fi, a person might say, ‘I can use my phone’s hot spot, so why should I pay for Wi-Fi in my car?’” he says.

Zeekr’s Wieser agrees that questions remain as to how to best monetize automotive subscription services.

They can appeal more to younger car buyers who are accustomed to paying monthly fees for smartphones and streaming videos, she says. That age group is also drawn to new auto technology features.

Yet, she adds, older people are most likely to buy a new car with the latest built-in connectivity for subscription services.

Young people, typically with less wherewithal than their elders, skew toward used cars. Those lack the latest in connected-vehicle technology.

Car consumers are becoming more discriminating, says Brauer: “The more savvy they get, the more they realize what subscriptions they need. Or don’t need.”

DiFeo aims to put happy customers on the road in a vehicle they can afford, he says. “Sometimes we can get ahead of ourselves with all these extra costs we’re trying to put on vehicles.”

But no automaker wants to leave money on the table, either.

OnStar Services, the granddaddy of subscription services that dates to 1996, earns billions of dollars as a side business for General Motors. Sixteen million cars on the road are equipped with OnStar, GM says.

OnStar runs as high as $49.99 a month for its premium package which includes automatic crash response, stolen vehicle assistance, remote vehicle access unlimited data and in-vehicle apps.

Connected-car offerings continue to grow, says Tata’s Kumar. “Every OEM wants to do more.”
And, of course, dealers do, too.