Subscription-based options are terrible for consumers

Unveiled recently at an appropriately digital presentation, BMW’s latest software update — imaginatively dubbed Operating System 7 — has sparked outrage among car enthusiasts. Why? Because BMW plans to convert many optional features into subscription-based services. Simply put, you pay for a feature as long as you use it.

The problem

At first glance, this may appear to be a cheap cash grab. And it’s not entirely inaccurate to conclude as such. Essentially, all new BMWs will be sold with the ability to have these options. Already, this raises a question: will the base price of the cars be increased to reflect this? To actually use the features, you pay even more money on top of the price of the car, just for an IT guy to click a checkbox next to ‘automatic climate control.’ And you never stop paying. This prospect has annoyed many car enthusiasts, and righteously so.

What’s more, if you choose not to activate certain features, BMW has the power to essentially advertise them to you in your car. Imagine accidentally pressing a blank physical button, and an ad pops up on your screen prompting you to pay for whatever feature the button would have activated had you spent more money. Annoying, right? Now imagine if that happened if you didn’t press the button. BMW has the ability and financial incentive to implement this. In other words, they can, and probably will.

In fact, BMW has come under fire before for requiring a subscription to use CarPlay, a plan that backfired so severely the marque scrapped it altogether. Admittedly, this new idea is similar in many ways. There are quite a few features — such as safety equipment — that drivers will always want to use, and to charge indefinitely for them would discourage their use, which would make the cars less safe. Not good. Safety features should be permanently available in a car. Volvo embodied this very idea when they refused to patent their invention of the seat belt.

The dull, rusty, sort of silver lining

For certain features, a subscription service may make more economic sense than buying them outright. To add heated front seats to a new BMW 530i, you must purchase a $950 package. Here in sunny Southern California, heated seats are usable for only about three months a year. If even that often. Of course, BMW has yet to announce pricing for any of these options, but we can speculate. If heated seats cost $60 a month and you use them for three months a year for three years, you’ve saved $400. Or, rather, you’ve spent $400 less. Given many new 5-Series are leased and returned after just a few years, it’s quite unlikely a subscription service would ultimately cost more.

Another potential benefit of this model is the ability to “try before you buy.” Not sure whether you would really use a heads-up display? Instead of paying the full price for the option, you can now commit to only a temporary, smaller payment before deciding to splurge for the entire thing. Annoyingly, this is a benefit only if you decide against the option. If you do want it, you will pay for it forever — arguably not worth the tradeoff. Additionally, buyers looking for a particularly rare color combination will have more choice, since an unfixable lack of equipment (or lack of affordability due to options) will be significantly less of a concern.

The used market

The shift to subscription-based options is likely to have a profound effect on the secondhand market. If part of your budget for a used vehicle goes toward paying BMW for access to features, your power to purchase the rest of the car decreases. Demand for these vehicles on the used market, therefore, goes down. This will increase the amount of depreciation incurred by the first owner even further — not to mention the lack of options to tout as a selling point. Meanwhile, BMW will perpetually rake in monthly subscription fees.

Another factor to consider is prices of used cars without subscription-based options. In all likelihood, these vehicles will become more desirable on the used market, since the price of options is not an indefinite, recurring cost. An obvious consequence will be higher prices for these models. Which means yes, that E39 M5 you’ve been lusting after will get even more expensive.

Many car enthusiasts are furious at the move to subscription-based options. Are they right? It certainly appears that way. While certain features, such as heated seats, might be more cost-effective in the short term when ordered via this model, the economic drawbacks for the consumer are much more significant. Sadly, it’s likely only a matter of time before other automakers follow suit.

 

About Ryan Lowe

Car fanatic located in Huntington Beach. I have a propensity to make fun of vehicles. I also play the drums and like clothes.

12 Comments

  1. “Volvo embodied this very idea when they refused to patent their invention of the seat belt.”

    The three-point belt, not the seat belt. Seat belts were around long before that.

    As for the subscription model, I’ll stick with my own approach of using features until they break and replacements are no longer available from private parties who had been hoarding the dwindling supplies of leftover stock from companies that no longer exist. It’s traditional at this point.

  2. The used market will do what they do now with Sirius and OnStar. Give it to you free for 30 days to a year and hope you like it enough to keep it. And then bug you for the next 10 years to reactivate it.

  3. Consumers shall consume. This is a great opportunity to consume a lot of stuff, and when you own and use the car that long that you must worry about support etc you are doing consumption wrong.

    Cynical.

  4. I said it before about Tesla – once someone can remotely update your car and turn stuff on and off or limit certain things -is it your car anymore?

    The other isue I see is yet more obsfucation of ECU diagnostics wild at the same time, likely leaving huge security vulnerabilities.

  5. I agree with everything you said. What I don’t get is why cars, essentially rolling computers by now, don’t get hacked more. Open up all features, cut off communications to the outside world, be the king of stolen options. It is odd, to say the least, that the EV community – otherwise nerdy and competent – hasn’t gone down further on that path. Car software safety has time and time again been shown to be lax, but I very rarely hear of anyone exploiting this further. And who really owns the car down the line anyway, when an OEM can turn off whatever functionality remotely? Tesla has been dipping its toes into that pit and it wasn’t pretty.

    Another issue is the consumer valuing the product. Prices and incentives in many places seem to be treated a lot like guesswork already. You said as much reviewing the small Cadillac SUV the other day, with people agreeing no one pays close to MSRP anyway. So if all the equipment, gadges, cabling and effort has been put into the car already, base prices need to reflect that. The China effect has been that everyone assumes that stuff costs nothing; costs quadruple and more in the hands of traders and retailers. Create that sort of attitude in the already strained car industry, and some backs will be broken.

    1. Yes there will be a fascinating battle to jail-break cars under this scenario, presumably with the manufacturers building in back doors to try to retain control.

      I gather Tesla is doing something like this already, adding or really enabling options to used cars that they resell, that the original owner did not purchase.

      I can’t see the heated seat thing working how you have described it Ryan; the idea is that you pay more not less!

      1. Yes, my wild guess is if BMW charges $950 for heated seats, the new cost to rent them will be $320 a month for a three month winter. Therefore anyone who wants them for more than one winter or needs them year-round pays significantly more.
        Woe the people in cold climates (unless they go to location-based pricing, tied to the GPS in the car).

        Which perversely also means that bargain basement zero option cars will be worth EXACTLY the same as top of the line cars come trade-in time. I.e. no more buying expensive options for your work truck just because of resale value three years down the road: buy the lowest possible version of your F-150 and three years later laugh at the guy trading in his King Ranch Platinum Edition getting the exact same price as you.

        This will especially be true with electric car where cheaper versions will have just an additional line of code restricting their range/performance. How long until they develop software to turn cloth seats into leather? 😉

    2. I worked for about a year at Honeywell/Garret in the “automotive cybersecurity division”. Most manufacturers have horrible cybersecurity. Tesla is one of the best. What is amazing is that as of the end of 2017 (when I left, I was the mechanical engineer and they decided not to do hardware) there had not been a known on the road malicious hack. There had been demonstrations and Chrysler had spent hundreds of millions on recalls for security flaws that allowed thieves to easily hack and steal vehicles. Also, NEVER plug in one of those OBD II dongles that has any communication features.
      I’m really surprised that there hasn’t been more EV hacking. For example, my first gen Volt is programmed to never drain the battery below 50% (GM wanted a ridiculously long battery life), I would love to change that to 60 or 75%.

      Who owns the car? See John Deere tractors. If you try to do ANY repair on the newer tractors, they will brick themselves until a factory tech undoes it. Apparently farmers are getting Eastern European hackers to do workarounds.

      1. This community is amazing; that’s a fascinating line of work. So how hard is it to change the Volt’s battery settings? I can’t imagine that they use some outlandish programming language, access can’t be impossible to overcome either. What is stopping people from trying that? Also, what’s the issue with OBD II dongles? I have two Bluetooth units, but they work with hardly any car.

        Have heard about the John Deere issues though. I’m honestly relieved that farmers find workarounds. There is something very dystopian about this “ownership” model.

        1. The OBD II dongles have been know to cause mysterious issues. The ones that have 3G connectivity, like the insurance companies use have zero cybersecurity. There is a video of someone on YouTube hacking one to stop a C5 Corvette, it was a demo in a parking lot.

  6. I wonder if the subscription would include a warranty for the related system. For example, if you buy a secondhand car out of warranty and then purchase a heated seats subscription, who pays to replace a heating element that shorted when the first owner drove it?

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