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The Rise of On-Demand Technology Services

In a sign of the changing times, motorists are set to increasingly have the option to pay for certain technology features and services on a month-to-month basis rather than being slugged a one-off cost at the time of purchase.

Subscription-based car applications are being rolled out by some of the market’s leading manufacturers. Apple CarPlay and Android Auto are the two platforms in the spotlight, however, BMW and Jaguar Land Rover are among those who have already backflipped on their decision to impose annual subscription plans for Apple CarPlay.

Following the changes, it means Apple CarPlay will be a free service for new BMW and Jaguar Land Rover vehicles equipped to handle the technology, just like more affordable manufacturers Kia and Hyundai have already offered drivers.

However, that doesn’t mean drivers can expect to avoid being slugged fees for using specific technology services. It is still expected that this will be the strategy adopted by manufacturers going forward, whereby things like entertainment, auto high beams, active cruise control could fall under a user-pays model.

 

 

Will drivers accept an on-demand services model?

While we have become accustomed to this type of model in many other parts of our day-to-day lives, including Netflix, food-preparation services and much more, it remains to be seen just how drivers will respond to this model for vehicle features. The pushback in response to BMW’s annual subscription-fees could be an indicator that drivers in today’s age are expecting more bang for their buck, especially at the premium end of the market.

In addition, as some features like active cruise control and auto high beams are extras at the time of purchase, drivers have long been able to negotiate themselves into acquiring ‘premium’ extras like this as part of their purchase, sometimes even as a freebie. Therefore, grouping these into a model where you have limited access, even if only charged when afforded that limited access, might work against the notion of value.

Ultimately, this early move may be one that forces customers to raise their guard when it comes to embracing on-demand services inside new cars. In theory it makes some sense that users only pay for things they want as they choose to embrace them, but at the same time, driving habits stay largely consistent over time. That is to say, it’s not easy to foresee an outcome where you decide one month that you could do with auto high beams and then suddenly not have a need for them the next month. And if you did go on to keep them, at what point does it become more expensive than it would have been to buy them outright in the first place, especially at a negotiated or bundled price?

How willing are you to pay for certain technology services on a subscription basis in your next car?

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7 comments

  1. Michael O'Hara says:

    Not at all.

    Subscription services are an excuse to bundle otherwise unsaleable products in order to lift the return from in-demand products.

    We’ve all been lured/forced into subscription services for a range of modern “conveniences” but i think cars are an example where the costs are already so large that there’s some element of marginal utility threshold that would be breached by even higher costs. Especially ongoing, virtually forever costs.

    But i’ve been wrong before.

    Regards
    Michael

    January 15th, 2020 at 11:00 am

  2. Michael Kohler says:

    Pretty difficult to then sell a secondhand car with subscriptions attached and transferring those subscriptions to the new buyer. Can’t see it taking off.

    January 15th, 2020 at 11:11 am

  3. John Aquilina says:

    The 2017 Model X Tesla reflects this splitting of a vehicle’s value.

    Being an early adopter I consider myself slugged with a higher capital cost. The future drop in new price from $200,000 to $168,000 was clearly telegraphed to me and all Tesla owners. But I’ve been compensated MORE than adequately.

    Firstly there is the free Supercharging for the life of the car. This has been more valuable to me than most owners. Covering 85,000kms p/a that’s worth approx $11,000 p/a in diesel.

    Then the Technology is CONSTANTLY updated. FREE OF CHARGE for the life of the car. I ticked the $8500 box for Full Self Drive /Autopilot which a Tesla rep quickly clarified it could NOT do totally. But I’ve watched the car grow with new capabilities EVERY update.

    I can’t wait for the FREE main control unit, ECU and full autopilot software later this year. Like any computer, give it 3 years, and it’s not able to cope with the newest software.

    They are just 2 ways a Tesla is a great investment, giving back true value well after you’ve paid for it.

    My high mileage use (233,000km) certainly accelerates the payback that EVERY Tesla owner enjoys. #Tesla

    January 15th, 2020 at 1:47 pm

  4. James Pritchard says:

    What happens when you need them in an emergency, I would not buy a car with an on-demand payment system for anything.

    January 15th, 2020 at 2:18 pm

  5. John A Codrington says:

    No. I expect that the technology that is with the vehicle comes with the vehicle at purchase and not be charged as an add-on on a subscription basis..

    January 15th, 2020 at 2:34 pm

  6. Allan Oakes says:

    not willing to pay extras at all

    January 15th, 2020 at 7:51 pm

  7. Bill Nixon says:

    My new Mustang comes fitted with auto high beam headlights and active cruise control. They are part of my car’s operating system. How could Ford ask me to pay for this and if I did not agree to pay a subscription how/when would they deactivate these functions? If they said at the next service I would not take the car back to the dealer for servicing but use a local mechanic, which the dealer would not like. Regarding Apple Car play, the software is factory installed in my car, but I chose not to use it, as I prefer to use Ford’s in house navigation system and I can still use my iPhone, play music downloaded in my iPhone, consult Siri, read text messages and send text messages by voice command without Apple Car play. Frankly I don’t think Apple Car Play adds much value.

    January 23rd, 2020 at 9:44 pm

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