Subscription-based vehicle features not ideal path for OEMs

Automakers that wish to sell and generate significant revenue from subscription-based vehicle features may have to overcome a few challenges first, according to a new consumer research study from Cox Automotive.

A main goal of the “Software Monetization” study was to gauge consumer awareness, consideration, and sentiment on features on demand. So far, the report’s findings are not favourable for OEMs focusing on this area of revenue generation.

“Our initial research indicates that the transition to Features on Demand will be an uphill battle for many automakers,” said Vanessa Ton, Senior Manager of Market and Customer Research at Cox Automotive, in a statement. She helped lead the research project.

“In the market right now, there is low consumer awareness and some skepticism on the part of shoppers,” she added. “To gain consumer acceptance, automakers must ensure consumers perceive subscription-based features as a good value and not just a money-grab.”

Only about 21 per cent of in-market new vehicle shopper respondents are familiar with features on demand, and 41% are interested. Some of the top features on demand for 65 per cent of consumers include the ability to try out features and turn them off if they do not like or need them, versus a long-term commitment. Another, for 61% of consumers, is the ability to upgrade or downgrade their vehicle as needed.

But pricing and data privacy concerns are among their top concerns: 58 per cent of respondents said the cost is too high, 41 per cent do not see the features on demand as good value for their money, 41 per cent have data security concerns, and 40 per cent have privacy issues.

Overall, consumers prefer free trials. There is also a tendency to be resistant to brands that require features on demand.

The study was conducted from December 2022 to January 2023. It included more than 2,000 respondents — all in-market new vehicle shoppers looking to buy a vehicle within the next two years.

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