The German sports and luxury car manufacturer Mercedes Benz is the latest to join a growing group of companies who are now requiring a monthly or annual subscription payment for accessing their vehicles’ built-in capabilities, a report from The Drive indicates.
According to the magazine, the company will be charging $1,200 per year plus applicable taxes for drivers to be able to unlock the full potential of their Mercedes EQ electric-powered vehicles in terms of performance.
The name of the feature is “Acceleration Increase” and it can be purchased via Mercedes Benz’s official website. The resulting software upgrade diminishes the time that it takes the vehicle to reach 60mph (96.6km/h) by almost a second.
BMW Faced Significant Backlash After Charging a Monthly Fee for Heated Seats
This newly released subscription comes only a few months after Mercedes’s rival BMW rolled out a similar program that requires a monthly payment for accessing their cars’ built-in heated seats.
Back in July, when the German car maker introduced the paid-in feature, the company was forced to issue a statement to justify its decision after facing significant backlash from car owners.
“With BMW ConnectedDrive Upgrade, customers will be able to explore new software-based features on a short-term basis by purchasing a trial, or buying that feature outright for a period of time or for the life of the vehicle”, the company emphasized.
Also read: Quick Guide to Invest in Tesla (TSLA) for Beginners
The cost of accessing BMW’s heated seats? $18 per month at the moment. The company stated that the features and cost may vary from one market to the other and that they are part of the firm’s “global aftersales strategy”.
Luxury car sales account for 2 to 3% of worldwide car sales, according to data from McKinsey & Co. In 2021, about 1.5 million cars priced over $80,000 were sold. The consulting firm predicts that sales in this segment will grow at a rate between 8% and 14%, depending on the price range.
With a global recession on the horizon, car manufacturers are seeking ways to create a reliable income stream. They aim to lessen their reliance on vehicle sales and boost the profit potential of each unit sold by finding ways to earn more from them even after they have left the dealership.
Three-Quarters of Consumers Not Willing to Pay Any Kind of Fees
Consumers have reacted negatively to this trend as most of the features are built into the car already, arguing that the price paid for the vehicle should allow them to fully use whatever is included in it.
However, manufacturers argue that they are making accessible premium software upgrades that use the existing hardware to an extent that would not be otherwise accessible.
A study from Cox Automotive released in April this year indicated that as much as three-quarters of the people surveyed were not willing to pay any additional monthly or annual fee for accessing their vehicles’ capabilities.
Meanwhile, those that are willing to do it indicated that extra safety, performance, and comfort features would be at the top of their list of preferred paid-in features.
The largest manufacturers such as Ford, GM, and Stellantis are all aiming to generate as much as $20 billion from this income stream by 2030, meaning that this trend is unlikely to go away.
The backlash has mostly due to the features that carmakers are charging being considered basic or essential to the level of comfort expected by buyers in exchange for the money they paid upfront.
Other Related Articles: