German automaker BMW (BMW.DE) has made a significant policy reversal by discontinuing its controversial practice of charging a monthly fee or subscription for activating hardware-based features, including heated seats, in its vehicles. This decision comes in response to widespread pushback from customers and a negative public reception, as reported by UK-based Autocar.
BMW’s board member for sales & marketing, Pieter Nota, stated, “What we don’t do any more – and that is a very well-known example – is offer seat heating by [subscription]. It’s either in or out. 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. People feel that they paid double – which was actually not true, but perception is reality, I always say.”
Earlier this year, BMW faced significant criticism when it introduced a subscription pricing model for heated seats in its vehicles, even if the feature was built into the car but not initially purchased. This move caused uproar among BMW enthusiasts and car aficionados worldwide. It is important to note that this subscription-based offering was implemented only in international markets, excluding the United States. However, American customers expressed their dissatisfaction through surveys and polls.
A study conducted by Cox Automotive in May revealed that 75% of respondents believed “features on demand will allow automakers to make more money,” while 69% stated that if specific features were only available via subscription for a particular brand, they would likely seek alternative options.
In a statement to Yahoo Finance, a BMW USA spokesperson clarified that subscription-based features for heated seats were never available in the US market. The spokesperson added, “We will continue to refine the Connected Drive offerings to make the latest technologies available to our customers and meet the demand in the markets.”
Despite this decision, Pieter Nota hinted that BMW might explore subscription pricing for certain software-based features such as self-driving capabilities, driving aids, and infotainment options. This approach follows Tesla’s pioneering efforts in offering subscription-based features for services like Autopilot and the advanced full-self-driving (FSD) beta feature. Notably, other automakers have started to follow suit, with General Motors aiming to generate between $20 billion and $25 billion in annual subscription revenue by 2030.
A survey conducted by S&P Global Mobility in July 2023 found that 82% of respondents who had previously experienced a free trial or existing subscription “would definitely or probably consider purchasing subscription-based services” for a future new car purchase. This underscores the growing trend toward subscription-based services in the automotive industry.
The decision of BMW to discontinue subscription fees for hardware-based features represents a victory for consumers who vocally opposed the company’s controversial policy. While BMW has opted to end subscription fees for heated seats, it appears they remain committed to exploring other software-based subscription services, aligning with the broader industry trend towards embracing this business model.
Source: Yahoo Finance
