Automakers' Subscription Services Target Used Cars
Automakers are now targeting used car owners with subscription services, as they aim to transform them into subscribers too. Learn how automakers are utilizing software-stuffed cars to resolve a "silly" situation and interact with customers in new ways.
Introduction
According to a report from MIT Technology Review, almost every global automaker has offered some kind of subscription, such as Tesla's Full Self-Driving ($15,000 upfront or $99 to $199 a month), General Motors' crash response and roadside assistance system OnStar (between $25 and $50 a month), or Toyota's Remote Connect, which offers remote start among other goodies ($8 a month or $80 a year).
The Latest Target: Used Car Owners
However, the latest target in the subscription push - or shakedown, depending on how you look at it - are used car owners. The average lifespan of passenger vehicles has steadily increased in recent years, and now sits at around 12 years in the US, with cars cycling through two or three, or four owners before they hit the scrap heap. Carmakers are now working on making those owners into subscribers too.
"It's a massive market," says Gary Silberg, who heads the global automotive sector at accounting and advisory firm KPMG. He says automakers are trying to use the increasingly software-stuffed car to resolve a "silly" situation. "You spend all the money building the car, you spend all the money designing it and building factories, and yet you don't get to talk to your customer," Silberg says. More connected vehicles and the apps that go along with them mean that automakers can. "Connected cars have completely changed the landscape of customer interaction," says Michael Bensel, vice president of mobility and connected services at Cariad, the Volkswagen Group's automotive software subsidiary. He describes the company's relationship with car buyers as shifting "from occasional contact at dealerships at times of purchase, maintenance, or repairs, to continuous direct customer contact during the entire ownership period."
Automakers' Investment in the Subscription Model
Automakers are investing heavily in the subscription model, which allows them to interact with customers in new ways, collect valuable data, and, of course, generate new revenue streams. However, the shift to subscriptions has not been without controversy. Some critics argue that the subscription model is simply a way for automakers to extract more money from their customers, rather than a genuine attempt to provide value-added services.
Despite the controversy, automakers seem committed to the subscription model and are increasingly targeting used car owners in their efforts to expand their subscriber base. Whether the subscription model is ultimately successful in the automotive industry remains to be seen, but one thing is clear: the days of the traditional, one-time purchase of a car may be numbered. As automakers continue to embrace the subscription model, we can expect to see more and more innovative services and features designed to attract and retain subscribers.
Overall, the move toward subscription services in the automotive industry represents a significant shift in how cars are bought, sold, and used. By leveraging the power of software and connectivity, automakers are transforming the car from a mere means of transportation into a sophisticated, personalized, and constantly evolving product. For used car owners, this means more options, more features, and more opportunities to interact with their vehicles in new and exciting ways. And for automakers, it means a more direct relationship with their customers, a wealth of valuable data, and a promising new revenue stream that could help them weather the many challenges facing the industry today.
General Motors spokesperson Anna Yu declined to share specific numbers on subscribers who drive used cars, but she says that "second owners are some of our most loyal customers" - often because they proactively reached out to ask about subscription-based products like OnStar or Super Cruise, its advanced driver assistance feature.
Source: "Automakers Targeting Used Car Owners with Subscription Services"
by Aarian Marshall, originally published on Wired.com on Apr 6, 2023, 8:00 AM.
