Source: Hyundai
Car subscriptions have been growing in popularity over the last year or so, with many auto makers getting in on the action including Hyundai, Cadillac, Ford, Lincoln and Volvo, to name a few.
In this week’s subscription headlines, three luxury car makers – BMW, Mercedes-Benz and Porsche – are bringing their own subscription products to market. They announced the news at the Detroit Auto Show.
Source: BMW
BMW: While BMW does not yet have a vehicle subscription, it does offer CarPlay, an in-car app that allows drivers to use their iPhones in smarter and safer ways using the car’s built-in display, which is moving to a subscription model. CarPlay puts iPhone features on the displays of select cars to get directions, make calls, send and receive messages, listen to music and more. According to 9 to 5 Mac, BMW added CarPlay to most of its vehicles starting in 2016. Previously available for a one-time fee of $300, CarPlay will be available via subscription. It will be free for the first year and $80 a year for subsequent years.
Automotive News reports that BMW is evaluating whether or not to test a subscription model in the U.S. at some point this year.
‘At the end of the day, the consumer is going to decide if that’s something they want to do,’ said Bernhard Kuhnt, CEO of BMW of North America.
Source: Porsche
Porsche: In October, Porsche announced the launch of its Passport plan, a tiered vehicle subscription service being tested in Atlanta. According to Automotive News, the top tier is $3,000 a month and gives customers access to 22 different models. The lower priced tier is $2,000 a month, but there are fewer vehicles to choose from. Yesterday, at the Automotive News World Congress in Detroit, Porsche Cars North America CEO Klaus Zellmer said that its subscription product is bringing new and younger customers to try Porsche. So far, there are about 50 subscribers to the Passport plan and most have chosen the top-tiered plan at $3,000 a month.
Zellmer said he believes car dealerships are still vital to their business, but he estimates that by 2025, 30 percent of all Porsche cars will be sold online.
‘I very much believe in the dealership being the mother ship of our future business model despite the fact that our online business has to be incorporated in there as well,’ Zellmer said in an Automotive News article. ‘We have to find the ideal balance of people starting their purchase journey with us online to them being handed over seamlessly to our sales staff to complete a transaction or complete a service.’
Source: Mercedes-Benz
Mercedes-Benz: At the Detroit Auto Show this week, Mercedes-Benz announced it would test the subscription model in a U.S. market to see if it was a viable business model for the luxury auto maker. Mercedes is currently testing out car subscriptions in Italy and Germany.
‘We need to learn,’ said Mercedes global sales chief Britta Seeger in an interview with Automotive News. ‘In different markets, we want to try this out.’
Insider Take:
The vehicle subscription market has been tested by a number of car manufacturers, but each subscription program is vastly differently from the next. No one seems to have really nailed what consumers want or how it benefits the manufacturer and car dealer. We expect the first few years of the vehicle subscription model to be one of testing and discovery. As Kuhnt so aptly pointed out, ultimately, it will be up to the consumer to decide if there is really a market for all-inclusive, no commitment, monthly subscriptions for cars.
