Car Buyers Balk at Paying Monthly Fees for Features and Services

Automakers have announced ambitious plans to generate billions in revenue by charging car buyers extra on an annual or monthly subscription basis for some in-car features, services and upgrades. Their plans beg the question: Are customers willing to pay?

The answer is not all good news for the automakers, according to a survey¹ by Cox Automotive, but reveals an opportunity for them to influence consumers’ attitudes toward software subscriptions.  

Three-quarters of consumers surveyed by Cox Automotive said they were not willing to pay an annual or monthly subscription fee for most items on their next vehicle. Rather, they expect most features and services to be included in the upfront sales price.

Safety and comfort features should be part of the purchase price, they said overwhelmingly. Specifically, 92% said heated and cooling seats should be part of the purchase price; 89% said remote start should be as well. Both items have been discussed by some automakers as subscription features. As for safety features, the response was almost as overwhelming; 89% said lane-keeping assist should be part of the price and 87% said automatic emergency braking should be too.

While they still favor inclusion in the purchase price, consumers are less adamant about services like in-vehicle Wi-Fi and stolen vehicle tracking. They recognize those are available by subscription and exhibit some willingness to pay extra.

Of the 25% of car buyers who said they would pay or might be willing to subscribe for some items, the features and services fell into three major buckets:

• Safety features, like lane-keeping assist and automatic emergency braking, topped the list by a wide margin of what consumers would be willing to pay extra for – more than 80%. And they said they would pay the most for those features – an extra $30 to $35 per month.
• Vehicle performance features got the nod by some consumers for extra charges. They include upgraded horsepower and torque, over-the-air software updates, stolen vehicle tracking and features that keep track of the vehicle’s operational performance and service. They’d pay $20 to $25 a month extra. The survey respondents were iffier on paying more for range upgrades on electric vehicles, which many automakers are doing now. Only 39% said they definitely would pay extra for added range.
• Creature comforts, like heated/cooling seats and remote start, gained some approval for extra pay, between $15 to $31 a month. But consumers were less enthusiastic about paying more for in-vehicle Wi-Fi. On personalization features, some said they would pay extra for an instrument cluster they could personalize but not for exterior lights that are reconfigurable.

Automakers Have a Sales Job to Do

For automakers to achieve their revenue aspirations by charging consumers extra for features and services, they have work to do.

For starters, they need to educate and sell consumers on the idea of paying extra.

• Only about half of consumers surveyed knew that paying extra on a subscription basis was a thing.
• Only one in five said they had tried subscribing to services, either on a free trial basis or a paid subscription.
• While the vast majority of buyers expect features and services to be part of the total purchase price, some are willing to pay extra for certain items. Automakers should consider packaging those items into safety technology or creature comfort packages so as not to put off consumers by nickel and diming them for individual items.

Michelle Krebs, executive analyst, and Rebecca Rydzewski, research manager of economic and industry insights, at Cox Automotive

¹Cox Automotive’s Research and Market Intelligence team conducted a survey from Jan. 19 to Jan. 26, 2022, of 217 consumers who intend to buy a new vehicle in the next two years.