Buckle up – subscriptions come for the best features of your car

The fully electric Mercedes-Benz EQS sedan – seen here at the Munich Motor Show 2021 – needs one … [+] Annual subscription in Germany to access the full functionality of the rear-wheel steering.

DeFodi Images via Getty Images

I’m going to get on your nerves here, suspecting you’re a subscriber.

Hopefully on Forbes, but also on some of the myriad industries in which it’s now common – music on Spotify, streaming services like Netflix NFLX or Disney +, razors, dinner meal prep, fitness classes, the list goes on.

Subscriptions to these services aren’t a big deal right now, are they?

That’s how Toyota thought until the automaker was on the cheek list in December. At that point it was revealed that the automaker was charging some customers a monthly subscription to use their key fob’s remote start feature – something pretty much everyone assumed we didn’t have to pay a monthly fee.

But if you think Toyota’s approach is a one-off step in the auto industry, then buckle up.

This is just the tip of a very large iceberg that will quickly overwhelm the auto industry. Not only for additional functions of a car’s navigation system or the trick rear-wheel steering in luxury models, but even for the more mundane functions that we take for granted today.

A salesman holds a Toyota Corolla vehicle key fob at a dealership in Orem, Utah in 2020.

© 2020 Bloomberg Finance LP

Toyota aroused the world’s wrath for two reasons. For one, it’s a subscription to a relatively innocuous (and cheap) feature that many people expect to be standard throughout their car ownership.

This is in contrast to Tesla TSLA, which offers versions of its autopilot hands-free system as a monthly subscription instead of paying the full cost upfront (the ill-named Full Self Driving package is a $ 10,000 option). This is an expensive add-on that you can be expected to have to pay for in some way – either upfront or through your ownership of the car.

Second, Toyota caught the world’s attention because it was among the first brands to introduce a subscription to a small service. Since the practice is still in its infancy, it comes as a shock to our understanding of how we pay for a car’s features.

But this idea of ​​charging for functions – large or small – will soon prevail.

The reason automakers do this is very simple: money.

Audi offers its navigation system Plus and full-speed WiFi connectivity as subscription-based options … [+] Features on several models, including the Q5 Sportback shown here.

AUDI AG

Now that over-the-air updates are becoming commonplace in today’s ever-connected cars, subscription-based features are just too shiny a source of income for brands to ignore.

Stellantis and GM, for example, have projected that they will generate $ 23 billion and $ 25 billion in revenue from subscription and software services annually through 2030, respectively. That’s a lot of money at a time when automakers are facing massive R&D costs due to the rapid transition to fully electric vehicles.

With these looming bills looming over the next decade, automakers are now arguing that if they bill a consumer once for a feature they can top up many times, they’re leaving money on the table.

In addition, the subscription model means that the income for a vehicle continues to flow even after it has been handed over to subsequent owners; a car that has been on the road for 20 years now translates into 20 years of sales for a feature that was once only paid for by first-time buyers.

In addition, consumers today are used to subscribing to a wide variety of services in everyday life. So automakers argue that another monthly fee isn’t a wholesale shock to our spending habits.

But buyers’ patience can be limited.

There is a difference between choosing an online music streaming service like Spotify and being forced to pay for a feature in your car that has been free for a long time or one that seems minor enough to be included for free to become.

BMW learned this the hard way in 2018 after charging an annual fee of $ 80 to access its vehicles’ Apple AAPL CarPlay connectivity – a feature that is standard on many new vehicles today, some tens of thousands of them of dollars less than BMWs.

The automaker quickly reversed course in late 2019 after receiving a major setback from consumers and the press.

And after Toyota’s kerfluffle exploded, the automaker made it clear that older models of its cars would no longer require a subscription to use its remote start feature; now only vehicles built after November 12, 2018 are subject to a fee.

But buyers even disapprove of subscriptions to more extensive features like ADAS or speakerphone systems, and choose to pay a one-time upfront fee, even if those costs run into the thousands.

Autolist.com asked car buyers whether they would prefer to pay for a feature in advance or by subscription; 44 percent said they would rather pay in advance than subscribe, and only 18 percent said they would prefer the subscription model. This is despite the fact that the upfront fees for these hands-free systems can easily run into thousands of dollars.

So what can you do as a buyer of a new car? Read the fine print, hard as it may be. Tell your salesperson if the features of the vehicle that you now have access to require a subscription in order to continue working after a certain period of time – and you will receive a written response.

This is especially true today for connectivity features (navigation systems, real-time traffic alerts, non-statutory ADAS features, or hands-free driving systems), even if you paid an additional cost for the option for those features.

But, as the Toyota case shows, it is also becoming increasingly common to pay subscription fees for even the more mundane features that we assume are free. Don’t blame Toyota, blame technology.