2 min read

🚘 Subscriptions in cars, a long, messy story

🚘 Subscriptions in cars, a long, messy story
Photo by Thibault Penin / Unsplash

You might have heard of BMV trying to sell a €17 heating seat monthly subscription. Heating-seats-as-a-Service anyone?

BMW heating seats for €17 a month or €175 a year in Germany. 

Yes, this sounds ludicrous.

On the surface, this seems to be a story of incumbent automakers trying to be more like Tesla or software companies and being quite heavy-handed about it. Of course, there's some truth to this. The business of selling recurring revenues has been the new black since Netflix showed the way.

It's not even a figure of style. It's literally GM's grand master plan.

You need to remember, though, that automakers' century-old untold business model has always been selling high-margin services on top of razor-thin car sales margins. I'm talking about financing and maintenance, which account for 30-40% of the total cost of ownership of a car for the many years you're going to own it. And if you buy insurance from your dealership, it's the real Jackpot.

The average total cost of car ownership is about the same in the US and Europe. A secret hidden in plain consumers' sight.

Subscriptions in disguise have always been there; there were just not called that. What's happening now is just ongoing adjustments and tweaks of this old business model. Β 

Are automakers greedy, though? Of course, they are. But then again, what's new? How many optional features are you pushed to pay on a brand new car, from painted car handles to defrosting rear window? For them to squeeze as much cent from the software layer of the car is just business as usual. The heating seat subscription is probably a dumb overzeal episode from the marketing department that will be removed in a few months, if not weeks.

All that being said, there are a few takeaways looking forward: