BMW is Going to Nickel-and-dime You to Death, Others Likely to Follow

Matt Posky
by Matt Posky

As automakers connect more vehicles to the internet and install app-based shops into the dashboard, we’ve become increasingly worried with in-car marketing annoyances and the prospect of companies hiding content behind paywalls. Our concerns turned out to be valid.

BMW has decided that it will charge customers an annual subscription fee if they want to utilize CarPlay in its latest models. Odd, considering most other automakers have been trying to get the platform inside their cars as standard equipment. However we’re betting that changes unless BMW gets a healthy dose of criticism.

Subscription models have, unfortunately, become growingly popular among businesses. Research conducted by management consulting firm McKinsey & Company estimated that subscription e-commerce retailers went from $57 million in sales in 2011 to $2.6 billion in 2016. But monthly delivery services are only the tip of the iceberg. Practically every industry is getting on the trend, whether it makes sense or not, making the official tally impossible to estimate. Some tech and media subscription services rake in billions all by their lonesome every year.

It’s easy to see why companies are trying to incorporate subscriptions. They’re an effective way of distancing value from a service. A couple bucks a month doesn’t sound like much but, as you add things up over a period of years, it becomes meaningful. Inputting your credit card and making things a click a way only makes things easier for the business. In fact, it’s often more work to cancel a subscription than start one and odds are good that you’ll forget it exists after a few months ⁠— allowing companies to continue charging you without your realizing it. A Waterstone Management Group survey from 2018 found that 84 of Americans vastly underestimate their monthly tech spending due to the phenomenon.

While BMW currently offers CarPlay for a one-time fee of $300, the new arrangement converts this to a 12-month plan of $80. The company does have a 240-month plan for $300, but it’s unlikely this will be promoted at dealerships. Either way, it doesn’t cost the automaker anything to add this content on the coming vehicles (all of which will be connected to the internet). It’s simply being tucked behind a paywall that’s being converted to a subscription model. Meanwhile, its rivals are (mostly) offering CarPlay as standard equipment.

Perhaps equally telling is BMW’s recent announcement that it is establishing a new partnership with U.S. Bank to provide an “enhanced digital experience and greater value for customers.” The automaker already said it was toying with the idea of a points-based reward system ⁠— potentially gamifying in-car shopping ⁠— while it develops a robust automotive marketplace. Now it’s issuing credit cards where customers can earn and redeem points toward BMW products and services. Round and round we go. Except we know where this stops; right back at the BMW store.

None of this would be so unsavory if it didn’t involve withholding content and stacking subscription fees. Sadly, we estimate that other premium manufacturers will attempt something similar (and soon). Mercedes-Benz has hinted at placing automotive options behind MBUX purchases as well. And don’t think this will be limited to high-end nameplates with customers more willing to spend money. As infotainment systems continue to evolve, this may become par for the course.

[Image: BMW]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Inside Looking Out Inside Looking Out on Jul 25, 2019

    Guys calm down, that is how it works in Europe - you have to pay for these kind of perks. We are lucky that search engine was invented in USA and not in Europe. If it was invented in Europe it would be ad free, no privacy intrusion,, no data mining but you had to pay subscription fee or even better - pay higher taxes since technology would be invented by Allmighty Government. Minitel anyone? Internet was invented not by Al Gore but by François Mitterrand.

  • Art Vandelay Art Vandelay on Jul 27, 2019

    I mean, it was standard in my Fiesta but whatever.

  • Golden2husky Have to say he did an excellent job on the C7, especially considering the limited budget he was given. I am very happy with my purchase.
  • Marty The problem isn't range; it's lack of electricity in multi-unit building parking. All you need is level 1 - a standard 120v wall socket - and if you're plugged in 10 hours overnight you get 280 miles per week or more. That's enough for most folks but you can use public charging to supplement when needed. Installing conduit circuits and outlets is simple and cheap; no charge stations needed.
  • 2manyvettes Tadge was at the Corvette Corral at the Rolex 24 hour sports car race at the end of January 2023. During the Q&A after his remarks someone stood up and told him "I will never buy an electric Corvette." His response? "I will never sell you an electric Corvette." Take that Fwiw.
  • Socrates77 They're pinching pennies for the investors like always, greed has turned GM into a joke of an old corporate American greed.
  • Analoggrotto looking at this takes me right back to the year when “CD-ROM” first entered public lexicon