Cue from Netflix? Car brands look to cash in on subscription services

Car companies expect to make billions in revenue from software and subscription services.
By : HT Auto Desk
| Updated on: 15 Dec 2021, 10:33 AM
File photo used for representational purpose. (HT Auto)
File photo used for representational purpose. (HT Auto)
File photo used for representational purpose. (HT Auto)
File photo used for representational purpose.

Much like how many buy a television set and then opt for subscription services from streaming platforms, modern-day cars also may be bought with the additional attraction of opting for certain subscription-based models. As such, car manufacturers are paying close attention to the kind of services that can be offered on newer models that will come as an optional extra, allowing the brands to make more moolah post the car-purchase process.

Thus far, car companies' main revenue comes from selling vehicles and from post-sales service costs. While these two are likely to remain at the core of the revenue model, there is a third option that is appearing more and more viable with massive advancements in in-car connected technologies.

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Take GM for instance. The American car company expects to earn $25 billion by 2030 through software and subscriptions alone. Then there is Stellantis that expects to earn $23 billion by the same year and through the same way.

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Thus far, car companies have offered more features, better upholstery and better drive capabilities within several variants of the same model to distinguish each variant. This means pricing has been varied within a particular model. But there is a chance that moving forward, a model comes fully loaded in terms of features and materials with only subscriptions being the difference.

But services come at a cost. Auto experts feel that companies will soon have to ensure that manufacturing cost of a mass-market model has to come down so that the purchasing price is kept in check while still ensuring a decent margin for the companies. On top of this could be the subscription-based services that could take off on the same lines as streaming platforms have in recent years.

Tesla has already started rolling out in-car games and video-conferencing features. Many others are following closely. The time for a car being just a car may well be fading already.

First Published Date: 15 Dec 2021, 10:33 AM IST
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