Can Automakers Really Cash In on Connectivity and Subscription Schemes?

A little over a decade ago, it seemed like everyone I knew was abandoning cable packages for online streaming services. They were cheaper, on-demand, and offered more choices with fewer advertisements. But as the years progressed, companies stopped selling their media to a handful of online video platforms and started building their own. Programming became more transient and isolated, forcing consumers to buy into additional subscription services. We’ve since hit a point where the overall consumer experience has diminished and grown more expensive, despite the steady influx of competition.

While automakers have been dabbling with subscription services of their own, their earliest attempts turned out to be such overwhelmingly bad deals that the public refused to play along. But they’re not giving up that easily. Industry players have been trying to figure out ways to charge customers indefinitely for years and are starting to settle upon subscription packages that can unlock hardware that’s already been installed into the vehicle or add software that can be downloaded via over-the-air (OTA) updates. Love or hate it, vehicular connectivity has opened up the door for new sources of revenue and businesses everywhere are eager to take advantage — with most companies projecting exceptionally healthy profits for the years ahead.

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Cadillac Subscriptions Return In 2020

If you read our coverage of Book by Cadillac, you’ll recall it was a minor financial disaster that had to be shut down in 2018. Cadillac was trying to develop a subscription model, following the lead of other premium manufacturers attempting to usher in a new age of consumerism, sans ownership. But the public didn’t take the bait.

We’ve had niggles about subscription-based sales models for years, whether it be for something hidden in your digital dashboard or affixed to an entire automobile. While they make sense for some services, we couldn’t make the numbers work for cars. It’s almost always the most expensive way to get into any given automobile. However, you do get a few nice perks as a consolation — things like insurance, registration, and maintenance — since you’re effectively renting the car. In the case of Cadillac, Book also allowed you to swap vehicles via a concierge service that would deliver the swapped vehicle pretty much anywhere you wanted — offering bottle water, umbrellas, and a positive attitude upon arrival.

Those extravagances may have been justifiable for those with money to burn, but the general populace wasn’t there to help General Motors shoulder the burden. The pilot program ended roughly a year ago. Yet GM’s chief marketing officer, Deborah Wahl, said Book would return in 2020, bigger and better than ever.

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Porsche Expands Subscription Service In North America

Porsche’s app-based subscription service is creeping into to four new cities in the United States and Canada. While technically still a pilot program designed to probe the market’s willingness, the expansion would indicate it’s one the automaker has some level of faith in.

We, however, are not among the true believers. Despite the added convenience of incorporating maintenance and insurance into one’s regular car payment, subscription services have not proven themselves to be an affordable way to own a car. In fact, they’re typically the most expensive way to procure a ride. But that doesn’t guarantee they won’t eventually catch on or make nameplates like Porsche oodles of cash, especially as the brand intends on making the service more costly.

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Porsche Figures a Subscription/Leasing Plan Just Might Discourage Flippers

Ultra-rare automobiles have a tendency to be scooped up by speculators hoping to turn a buck. Manufacturers hate this, as they see none of that sweet, secondhand scratch — plus, the vehicles frequently end up as garage queens tucked away from the public eye. While a bit of a grimy move, it’s easy to understand why someone might be willing to fall from a manufacturer’s good graces so they can flip an already expensive automobile for several times what they paid.

Automakers have come up with interesting ways to circumvent the problem, often establishing hard limits on when a customer can resell a particularly in-demand model, but it never manages to stop it from happening entirely. However, Porsche CEO Oliver Blume thinks he has a novel solution — one that we’re a bit torn on.

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California Auto Dealers Ask Volvo to End Subscription Service

The California New Car Dealers Association is requesting that Volvo immediately end its Care by Volvo subscription service within the state. According to the group, the automaker is in violation of California’s franchise and consumer protection laws.

It’s been a long time coming, as Care by Volvo is clearly designed to minimize dealer interactions. Anders Gustafsson, CEO of Volvo Cars of North America, even said the program claimed as much as 15 percent of the XC40 crossovers intended for dealerships this year.

“It’s really the same concerns from everybody, and it’s just that they don’t feel secure,” Gustafsson of said dealers last month. “They’re afraid we’re going to take something away from them … I would say the biggest question mark around subscriptions is that consumers need to decide that. Our retailers are asking, ‘Please let us be involved, because we can help.'”

It looks like they’re tired of begging.

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365 Days Later: What Volvo's Subscription Service Means for the Larger Industry

Despite the push from an eager industry, car subscription services haven’t proven an overwhelming success. The general consensus is that premium services, while intriguing concepts, are too expensive and complicated to maintain at scale. Book by Cadillac, which was recently suspended by General Motors, is emblematic of the public’s lackadaisical response to a system mired in logistical issues.

However, the concept itself isn’t dead just because one manufacturer decided it wasn’t worthwhile. Other premium nameplates still have their own services — Toyota plans to launch its own subscription-based pilot program in Japan soon, while Volvo Cars has enjoyed some success with Care by Volvo. Still, framing it as a trouble-free victory for the brand would be a mistake. Volvo’s subscription service has been as much a learning opportunity as it has been an overwhelming triumph.

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  • Redapple2 Brandee. Another Stanford grad. Bankman Fried. The blood test girl. Mary Barra.
  • Redapple2 CruiseSTUPID, battery problems, software, killing carplay and AM. Why is this so hard.
  • Alan Like all testing and analysis work you need a good set of requirements. If you don't you'll find or end up with gaps.
  • Alan In aviation there is more vigourous testing, well, until Boeing changed things.
  • Alan This outcome was certain.The US, Australia and Canada need to approach this differently. A policy towards plug in hybrids should of been a first step. As in CAFE gradually tighten FE from there.There's no reason why you can't have a 2 litre F-150 with electric motors putting out 400-500hp. A 2 litre turbo is good for 200hp more than enough to move a pickup.Also increase fuel tax/excise every year to fill the void in loss of revenue.