Why OEMs Should Start Taking Automotive Subscriptions Services Seriously / Blogs / Perficient

Sitting here by the lake on a Saturday afternoon, I am watching my wife scroll through our entertainment options. This otherwise ordinary practice made me realize that we are very used to subscriptions and countless choices for entertainment. Before our modern bombardment of media, my childhood consisted of three network channels and a large antenna that was fixed to the side of my home. Of course, it was a time when I was our family remote control. It makes sense now that entertainment-based subscriptions are such a big part of our lives – we’re making up for lost time.

Speaking of lost time, most drivers have only experienced the traditional concept of vehicle ownership. They bought a car, whether outright or with a loan, and they drove it for years before ever considering another car. This traditional concept has faded slightly as drivers became more aware and accepting of ideas like leasing vehicles. Increasing flexibility in other aspects of our lives, such as regularly getting the latest phone and switching up streaming platforms, has made us hungry for more options on demand.

If we are now so conditioned to prefer our entertainment in the form of subscriptions, it is no wonder that certain consumers are preferring to subscribe to vehicles. Automotive subscription services are allowing consumers to subscribe to vehicles for certain seasons or periods of their lives, thus giving consumers more flexibility and choices, achieving the promise of mobility innovation.

Consumers Prefer Monthly Payments and Memberships

It would be wrong to ignore our conditioning to pay for things monthly. Instead of upfront costs, we’re much more familiar with paying off expenses over time with our credit cards or paying for memberships. It’s no accident that our entertainment is packaged in a monthly bill for streaming platforms.

Naturally, this familiarity with monthly billing extends to the automotive industry – many drivers lease vehicles or have car payments. For these reasons, there’s a short putt towards automotive subscription services, and it is certainly worth playing the game. Consumers pay for what they want when they want it, and OEMs prosper from having a continuous revenue stream with these consumers. This helps on two fronts – the lifetime value of a consumer and incrementality in terms of revenues beyond the vehicle sale. And in some cases, it is incrementality instead of the vehicle sale.

Digital-First or Bust

Most automotive manufacturers are realizing that they must approach their relationship with customers in an unprecedented way: the preferred customer experience and brand loyalty in automotive looks much different now than they did just a decade ago. As consumers increasingly show digital-first preferences, they’ve pulled back from desiring a dealership negotiation experience.

While dealerships remain, OEMs have attempted to address changing preferences by launching apps for consumers. For example, consumers can now manage their vehicles in terms of maintenance, locks, remote starts, and software updates right from their phones. The vehicles are managed and controlled by powerful screens that control not only every aspect of the vehicle, but also all of the navigation, infotainment, and entertainment as well as all kinds of apps and plug-ins to improve the consumer experience.

Unprecedented Loyalty is Within Reach

Creating and improving digital experiences for the customer is a way that OEMs can foster a closer relationship with their consumers. OEM apps not only offer the ability to manage accounts but also to collect loyalty points in an attempt to build customer retention. Further, automotive subscriptions are a way for them to generate incremental revenue beyond the sale of a vehicle. Just as consumers buy into phone plans and trade in old ****** for the next edition, drivers would choose a subscription to vehicles over traditional ownership in the form of regular payments. This regular payment relationship combined with flexibility for the consumer generates a new kind of brand loyalty for OEMs.

If you’re interested in learning more about how OEMs can implement automotive subscription services to improve customer experience and loyalty, tap into Perficient’s automotive expertise.

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