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Auto buyer backlash comes as automakers chase software riches


Are consumers willing to pay as much for features as manufacturers expect? Hyundai, which has set itself apart in the US by bringing premium technology to its mass-market models, is taking a more holistic approach.

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January 22, 2022, 04:03 ONLY

The industry is catching up with Tesla, which has wowed owners for years with fun software features like car horns with music.  (Shutterstock (FOR REPRESENTATIVE PURPOSE)) (HT_PRINT)
The industry is catching up with Tesla, which has wowed owners for years with fun software features like car horns with music. (Shutterstock (FOR REPRESENTATIVE PURPOSE)) (HT_PRINT)

It’s winter in Detroit, the time of year when the remote start function on my Subaru switches from a neglected smartphone app to a ritual step before leaving the house. With the low 20s high, I want the engine to warm up and the saddle heat caught fire by the time I got to my car.

I pay Subaru $4.95 a month for this privilege, which makes me a prime example of how auto companies are betting on their future – consumers are willing to pay a subscription fee. sign up for extras after they buy the car.

Automakers have set some ambitious goals on this front: General Motors told investors it will generate $20 billion to $25 billion a year by 2030 with software in car. Stellantis, owner of Jeep car brands, is targeting $20 billion by the end of the decade; it made $400 million from such features last year.

The industry is catching up Tesla, which has wowed owners for years with fun software features like musical car horns, Christmas light shows, and other hijinks that appear after software updates. Paying $12,000 up front or as much as $199 a month for Tesla’s always-on fully self-driving capability is a whole other level of consumer confidence.

Whether the incumbents can create the same kind of magic with their clients remains to be seen. According to a study published last October by JD Power, most drivers don’t bother to explore new technology in their cars. When it comes to smartphone apps that sync with a vehicle, 66% of car buyers say they’re not willing to pay any for the app’s features; a quarter is fine for a monthly fee of $5 or $10, according to another JD Power survey from January of last year.

“At the moment, I don’t think we’re in line with a consumer perspective compared to what the industry is looking to deliver it’s going to come with those subscriptions,” said Kristin Kolodge, an analyst at JD Power. . ”

There also seems to be a fine line between pleasing consumers and provoking their outrage.

When a number Toyota owners realize they need an $8 per month subscription to continue using the remote start feature on their main fobs, the social media backlash was fast. (Main fob functionality is enabled by Toyota’s connected service plans, which are available for a free trial period of three to 10 years, a spokesperson explained.)

BMW car was publicly skewered after comments were made about charging additional fees for heated seats. A spokesperson said the company does not charge a subscription fee for heated seats and that it is in the “evaluation phase” of other software features.

Despite these pitfalls, automakers seem optimistic about finding a software sweet spot. Jeep is viewing terrain instructions for Wrangler owners. In the future you can buy a Dodge muscle car let’s you download the specifications of your favorite race car drivers or listen to their music playlists.

Mamatha Chamarthi, Stellantis software monetization lead, said: “We thought a lot about signing up and not signing up. did not create friction against their expectations. ”

Both General Motors and Ford are about to test that principle with subscriptions to their advanced driver assistance systems, called SuperCruise and BlueCruise respectively. Each company offers a three-year trial period on certain models; then the customer has to pay a recurring fee. Over time, they will offer more features, like automatic lane changes.

Hyundai, the company that has set itself apart in the US by bringing premium technology to its mass-market vehicles, is taking a more holistic approach. Manish Mehrotra, head of digital business in North America, says battery analysis or digital service alerts are useful for owners and also help the company save money on things like costs. insurance.

There are still many unanswered questions. How do you put a price on safety? Or bill periodically for the most advanced technology available today and popular 5 years from now? As Alexander Edwards, a marketing consultant for the auto industry, told me, “Nobody buys a car because it has an FM stereo system.”

Date of first publication: January 22, 2022, 04:03 PM IST

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