Subscription-based services for vehicle infotainment services Is the customer ready?

Subscription-based services for vehicle infotainment services Is the customer ready?

More and more carmakers are coming out with vehicles whose infotainment systems can be paired with their smartphones to get the best out of their Android phone or iPhone. Softwares like Apple CarPlay and Android Auto-enable the customer to stream their phone content to the infotainment system.  

Additionally, there are cars that are equipped with onboard telematics system like OnStar and entertainment systems like Sirius XM.  Most of the infotainment services can be availed by paying a one-time charge.

However, the payment model is soon going to change as customers will now be required to pay a subscription or annual fees for any features that they may wish to avail in the infotainment system. The upcoming change has sparked off a debate amongst experts, vehicle owners, and prospective customers.

 

Is the subscription-model justifiable?

The debate began after BMW’s announcement regarding a subscription-based model for its CarPlay services. BMW’s new payment model requires customers to pay $80 annual subscription fees instead of a $300 one-time charge. BMW claims that the new payment scheme will enable subscribers to switch from one service to another without losing their money.

On the surface, the subscription-model looks attractive and customer-friendly but a deeper analysis indicates the model will help car manufacturers to improve their gross margin by 20-30%.  Moreover, the subscription services market is poised to grow to $6 billion by 2023.

 

How much is too much?

The subscription-based model appears quite attractive to every customer. But a wise is required to steer clear of unwanted services.

Every customer needs to be aware of policies related to free trials, cancellations, renewals, and upgrades. Ask yourself these questions:  Do I require additional safety features? Am I really in need of a navigation aid?

 As far as entertainment is concerned, most of the cars have a USB port that can be used to connect your smartphone to playing music or listening to radio, audiobooks, and podcasts.

 

Opportunity in Dubai car market

The subscription model is a good opportunity for expats in Dubai who often come for a shorter duration of time. These customers can buy a car that has an infotainment system and chooses to subscribe to services as per their needs.

 Cars with infotainment system will also fetch a good price in the used-car market because the next owner can activate or discontinue services as per the need.