BMW defends subscription program

BMW Australia has defended the subscription program that will be introduced on the new X1 SUV from this month and across other new model lines as vehicles become available (see table below).

The ‘user pays’ model – dubbed ConnectedDrive – means buyers of BMW vehicles will have to subscribe and pay to use features such as heated seats and heated steering wheels, despite the equipment being fitted as standard to every car.

Speaking to media gathered for the launch of the 2023 BMW X1 in Melbourne last week, BMW X Model range product and planning manager Daniel Silverwood said the subscription program is about offering customers flexibility, while also forming an additional revenue stream for the firm.

“The features could have been made standard, and the price increased, but this way is more flexible – it’s for the customer to decide. Ultimately, if the customer wants heated seats, they’re going to do this, but if they don’t want the heated seats they don’t have to,” he said.

“It’s a flexibility issue. For customers who don’t need a certain option at a certain time, there is no need to pay for that option the whole time. You can run the subscription when you need it.

“The heated steering wheel is just one example. Take up of that option was less than two per cent, and if a customer wanted that option build-to-order, it was a very long wait time. Whereas now, any vehicle could be activated at any stage.”

Mr Silverwood was unable to address questions surrounding the environmental merits of fitting entire model lines of vehicles with options that may never be used.

At a time when vehicle manufacturers are attempting to lessen their environmental footprint, the additional resources added to vehicles – and the processing power utilised in switching them on and off remotely at will – seems little more than a convenient revenue stream.

With the new X1 sDrive18i, seat heaters will cost $589 across the lifetime of the vehicle via digital purchase but are standard on xDrive20i variants. However, both variants ask a $349 surcharge for use of the heated steering wheel. BMW also offers monthly and yearly use packages on both features.

For buyers of pricier models, subscription services such as ConnectedDrive could provide a means to purchase a vehicle without paying Luxury Car tax (LCT) through a lower initial purchase price, followed by LCT-free subscription payments to use desired features at a later point.

Subscription services are another means for manufacturers to cover the development cost, provision and projected demand for a growing range of in-vehicle features.

Reliable modern vehicles with long warranties are not visiting the dealership as frequently as OEMs would like. But regular over-the-air software updates offered by OEMs could be billed as ‘digital valets’, enhancing existing features and adding new ones.

Such ‘refreshes’ ought to strengthen the relationship between OEMs and used vehicle owners.

In addition, subscription features could make cars more configurable for subsequent owners, enabling them to specify features as they would with a new car but without the associated high purchase price of a factory-fresh vehicle.

Locally, BMW joins Toyota and Hyundai in offering a user-pays system for certain connectivity and equipment items, with connectivity experts VNC Automotive saying recently the idea is no different to online streaming services and the likes.

“Consumers are no stranger to the subscription model, now firmly a part of daily life for many, with millions of people regularly paying to use services such as Netflix, Amazon Prime and Spotify, as well as subscribing to deliveries of groceries,” said VNC Automotive product engineering director Peter Galek recently.

“This familiarity may smooth the transition for manufacturers as they look to recreate that model inside their vehicles.

“Exciting new features or upgrades for a vehicle are a strong incentive for traditional vehicle users to subscribe. Such models give OEMs the best chance of marketing more features over the vehicle’s lifetime”.

What’s coming from BMW: