New-car owners will pay even more for optional features they want

BMW  (BMWYY) - Get Free Report was in the hot seat.

The German automaker took a lot of heat a few years back when it announced a subscription service where drivers would have to pay a fee to activate the heated seats in their vehicles.

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The idea of for paying for heated seats that had already been installed at the factory got a rather chilly reception from the driving public and the company recently put the idea on ice.

“We thought that we would provide an extra service to the customer by offering the chance to activate that later, but the user acceptance isn’t that high," Pieter Nota, BMW's board member for sales and marketing, recently told Autocar. 

"People feel that they paid double – which was actually not true, but perception is reality, I always say. So that was the reason we stopped that.”

An informal turn around X, formerly Twitter, didn't find a hunk of burning love for heated seats.

"BMW, I have an idea what if you lock up their steering and they pay to re-activate it," said AJ.

"Glad they took a 180 here," wrote Cashley Gold. "I wonder how this idea passed so many people/meetings and still managed to be pushed through."

"The cash grab is getting out of hand with these features," said Rough Anon. 

Automakers offering subscription plans

The heated-seat-subscription plan may be toast, but automakers are looking at plenty of other subscription plans, ranging from entertainment options to enhanced navigation and hands-free driving.

Ford  (F) - Get Free Report Chief Executive Jim Farley likes the idea, telling analysts during the company's July 28 second-quarter-earnings call that "we are already seeing sustained double-digit quarter-over-quarter growth in subscriptions across all of our business segments and, most importantly, at gross margins of around 50%.

"And our next-generation digital platform will enable a step function change in capability, allowing us to scale and deliver value to both our retail and commercial customers even faster," Farley said, according to a transcript of the call.

Consumers can activate Ford’s hands-free highway-driving technology, BlueCruise, at the time of purchase for three years by rolling the $2,100 cost into the financing. Or they can take a free trial, which is available for 90 days from the vehicle purchase date.

Meanwhile, General Motors  (GM) - Get Free Report said in 2021 that it expected its in-car subscription services "to generate nearly $2 billion in revenue this year and will reach as high as $25 billion by the end of the decade."

Three years of General Motors' Super Cruise highway hands-free system costs $2,200 up front on Chevrolet and GMC vehicles -- $2,500 for Cadillacs -- after which it's $25 a month or $250 per year via subscription, Axios noted.

And Tesla  (TSLA) - Get Free Report recently cut the price of its Full Self-Driving software by $3,000, to $12,000, in the U.S., which despite name still requires motorists to keep their hands on the steering wheel at all times.

You might think consumers would be somewhat peeved about these additional costs, but a survey conducted by S&P Global Mobility found that the perceived outrage doesn't match reality.

'Consumers welcome subscriptions': S&P

"Consumers are welcoming to the idea of subscriptions because it gives them exposure to features or technology that they may not have had in the past," Yanina Mills, senior technical research analyst at S&P Global Mobility, said in a statement.

Once they're exposed to connected-services subscriptions, consumers seem pretty happy with them, as most previous-subscriber respondents said they were likely to renew.

Satisfaction is high as well, as 85% of respondents would recommend their service to a friend, S&P said. The firm said that among individual brands, Audi Connect and BMW ConnectedDrive consistently perform well and scored high in most global markets for the third survey year in a row.

Enhanced navigation and advanced driver-assist system functionality top the desirability list, the survey found.

Paid upgrade safety features, such as high-beam assist and driving-video recorder, earned the highest satisfaction of all connected services. And navigation and safety-security features were most desired in respondents' next vehicles.

And those heated seats and other less expensive so-called comfort features?

S&P said that compared with more novel and higher-priced technology features, these less-expensive options have less perceived value when offered as a subscription – especially when they have long been available as standard on upper-trim models. 

"When everything becomes a subscription, it becomes overkill," Mills said.

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