Car-shoppers are largely satisfied with subscription-based
infotainment services, but value and exposure matter most. Data
security and privacy remain issues.
SOUTHFIELD, Mich., July 19,
2023 /PRNewswire/ -- Want to create a
social-media firestorm? Announce that popular in-car features will
require a subscription -- on top of what people already are paying
for the vehicle. General Motors and BMW have recently sparked
controversy by announcing efforts to grow subscription-based
products and services in future vehicles -- which reportedly
weren't greeted well by consumers.
Car-shoppers are largely satisfied with
subscription-based infotainment services, but value and exposure
matter most.
But here's the rub: The perceived outrage doesn't match reality.
Once consumers experience connected services, they are
overwhelmingly satisfied and likely to resubscribe, according to a
recent global consumer survey of nearly 8,000 consumers
conducted by S&P Global Mobility.
"Consumers are welcoming to the idea of subscriptions, because
it gives them exposure to features or technology that they may not
have had in the past," said Yanina
Mills, senior technical research analyst at S&P Global
Mobility.
In a subset of about 4,500 respondents who had experienced a
free trial or an existing subscription on a model year 2016 vehicle
or newer, 82% said they would definitely or probably consider
purchasing subscription-based services on a future new vehicle
purchase.
Exposure sells subscriptions
Fumbled introductions are
one thing. Selling subscriptions in the here and now is
another. More than one in four respondents - 28% to be exact --
either did not know that connected services were available, and/or
noted the dealer did not offer (or even mention) them. Improving
education at point-of-sale is essential for category growth.
In-vehicle exposure is even better than education for growing
demand and fostering satisfaction and retention with these services
and brands. 45% of respondents had the service activated at the
dealership, typically as part of a free trial period. That improves
the odds of growing subscribers. "It's all a matter of exposure,"
Mills said.
That's because, once exposed, consumers are pretty happy with
their connected services subscriptions. The vast majority of
previous-subscriber respondents said they were likely to renew.
Satisfaction is high as well, as 85% of respondents would recommend
their service to a friend. Among individual brands, Audi Connect
and BMW ConnectedDrive consistently perform well, scoring high in
most global markets for the third survey year in a row.
So, how could OEMs do better in rolling out new connected ideas?
When it comes to subscription-based connected services, Mills says,
"Marketing is everything. Implementation is everything."
In GM's case, they touted the benefits of their new infotainment
system, to be found in its next generation of EVs. According to the
automaker, GM wishes to "manage the overall in-vehicle experience
in a more holistic way." A major goal is to "reduce complexity and
feature duplication," eliminating the redundancy between native
onboard infotainment and the customer's smartphone.
But that came with a big tradeoff: Getting rid of the Apple
CarPlay and Android Auto user interfaces. The media focused on that
detail, in terms of erasing any of the new infotainment system's
advantages. After all, these very popular smartphone mirroring
apps come standard on almost every new vehicle today.
Fanni Li, connected car services
research lead at S&P Global Mobility, says that GM is quite
aggressive in this area, but warns that making the change could
risk GM customer satisfaction. Also at stake: GM's desire to
generate $20 to $25 billion
yearly through subscription services by 2030.
Subscriptions need to add value
So, how to get it
right? Paid functional upgrades have been available in the market
for only about three years. Despite that short timeframe, more
than half of respondents already want such an upgrade in their next
vehicle.
But not all subscription-based upgrades are created equal.
Enhanced navigation and advanced driver-assist system (ADAS)
functionality top the desirability list. "For a lot of those
features, when you buy them in full at the dealership, the initial
investment is overwhelming," according to Mills. A subscription
brings their cost into reach.
As seen in previous S&P Global Mobility consumer surveys,
safety features prove very popular – although there are differences
in appeal by region. For instance, at a country level, Brazil respondents have the lowest threshold
for price points for paid updates in all subscription schemes,
while Japan respondents reported
the highest threshold for pricing they'd be willing to pay for
the same updates, closely followed by the UK.
But there are some pan-global trends worthy of note. Paid
upgrade safety features, such as high-beam assist and driving-video
recorder, earned the highest satisfaction – 89% -- of all connected
services. Likewise, navigation and safety/security features were
the ones most desired in respondents' next vehicles.
Less expensive comfort features, such as heated seats and a
heated steering wheel, prove less popular for subscriptions.
Compared to more novel and higher-priced technology features, these
less-expensive options have less perceived value when structured as
a subscription – especially when they have long been available as
standard on upper-trim models. As Mills notes, "When everything
becomes a subscription, it becomes overkill."
Getting heated over seats
BMW may have crossed that
line with their expansion of connected services. Many observers
boiled down the complex model- and market-specific program to one
common theme -- surprisingly charging owners to use heated seats
that were already installed in their cars.
S&P Global Mobility survey data suggests, however, that this
furor was a tempest in a teapot. Fewer than 30% of survey
respondents are willing to pay for heated seats or a heated
steering wheel by monthly subscription, anyway. Value-wise, these
features are relatively affordable to buy in a single payment,
reducing the need to spread out payments over a subscription.
"The frequency of usage is an important factor," Mills observed.
"If you have a feature that you only use once or twice, you're not
going to renew that feature." Using heated seats or a heated
steering wheel is very climate-dependent, so usage can vary by
season.
Smartphone vs Native
While ADAS functionality or
heated seats can't be provided by smartphones, many infotainment
services are. And consumers are accustomed to using their
smartphone for navigation and entertainment features -- from maps
to music to hands-free texting.
As consumers pare down their subscriptions, features that are
redundant between the vehicle and the phone likely are the first to
go -- and the smartphone almost always wins. S&P Mobility found
that Gen Z and Millennial respondents are most likely to drop
connected-services subscriptions because of similar services on
their smartphones.
GM's elimination of Apple CarPlay and Android Auto takes the
smartphone out of the equation. This could improve their odds
of gaining and retaining subscriptions. But given that 89% of
current connected-services subscribers resubscribe anyway, the
potential modest increase in subscriptions isn't the primary reason
for GM going native. GM sees an opportunity in consumer usage
data.
"GM cannot get consumers' usage data from the infotainment
system if users only connect via third party apps like Apple
CarPlay and Android Auto," Li said. "Having this data on their own
will become one of the competitive advantages for OEMs."
Privacy and Trust
But when it comes to vehicle data
usage, Mills says, "It's a delicate balance for automakers." While
accessing consumer data also improves features like EV-specific
routing and range estimates, consumers are concerned about data
privacy. 37% of respondents worry about security issues, while 32%
fail to understand the value that a connected service would provide
from the shared data.
Turns out the best way to win over consumers is to give them
something for free. 74% of respondents are willing to share data in
exchange for free services, with Gen Z and Millennials being the
most (80%) likely. Again, there are regional differences: Consumers
living in Japan are the most
reluctant, with just 58% being willing to share data for free
services, whereas 90% of consumers in India are willing to make that exchange.
But who do consumers trust with their data? OEMs are the most
trusted, with 31% of consumers feeling comfortable with them.
That's higher than the trust level associated with technology
companies (23%). The difference in trust likely stems from how
much data is available to each respective entity. As Mills notes,
for automakers, "That amount of data is limited. It doesn't go to
the depth of where your personal devices go."
In other words, your smartphone apps already know far more about
you than your SUV likely ever will.
Subscription-based connected services provide great potential
for OEMs. High consumer satisfaction and renewal rates show that
buyers are willing to subscribe. But proper marketing and
implementation are essential for success, especially regarding
concerns of value and data privacy.
About S&P Global Mobility
At S&P Global
Mobility, we provide invaluable insights derived from unmatched
automotive data, enabling our customers to anticipate change and
make decisions with conviction. Our expertise helps them to
optimize their businesses, reach the right consumers, and shape the
future of mobility. We open the door to automotive innovation,
revealing the buying patterns of today and helping customers plan
for the emerging technologies of tomorrow.
S&P Global Mobility is a division of S&P Global (NYSE:
SPGI). S&P Global is the world's foremost provider of credit
ratings, benchmarks, analytics and workflow solutions in the global
capital, commodity, and automotive markets. With every one of our
offerings, we help many of the world's leading organizations
navigate the economic landscape so they can plan for tomorrow,
today. For more information, visit
www.spglobal.com/mobility.
(Disclosure: The survey was in the field in March - well
after BMW had been involved in the heated-seat issue, but before GM
had announced its plans for a new native architecture designed
around offering connected car services.)
Media Contact:
Michelle Culver
S&P Global Mobility
248.728.7496 or 248.342.6211
Michelle.Culver@spglobal.com
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SOURCE S&P Global Mobility