Even Wealthy Individuals Hesitate to Pay for Monthly Heated Seat Subscriptions

Buyers of Premium Vehicles Don’t Want to Pay Recurring Subscriptions

In an era where subscription services have become the norm across various industries, the automotive sector is facing a unique challenge. Buyers of premium vehicles are increasingly resistant to the idea of paying recurring subscription fees for features that they believe should be included in the purchase price of their luxury cars. This sentiment has been echoed by Lincoln, a brand that has taken a stand against the subscription model, opting instead to incorporate the costs of features into the Manufacturer’s Suggested Retail Price (MSRP) of their vehicles.

The Subscription Dilemma

The automotive industry has been experimenting with subscription models for features like heated seats, enhanced performance, and advanced driver-assistance systems. However, many luxury car buyers find the idea of paying extra for features that are already built into their vehicles to be frustrating. For instance, the notion of paying $15 a month for heated seats or $100 a month for a horsepower boost is met with skepticism and disdain. This was a lesson learned the hard way by brands like BMW, which faced backlash for attempting to monetize features that consumers felt should be standard.

Lincoln’s outgoing president, Dianne Craig, has articulated this consumer sentiment clearly: premium buyers prefer to pay for everything upfront rather than being "nickel-and-dimed" throughout their ownership experience. This approach aligns with the expectations of luxury car buyers, who often expect a seamless and all-inclusive ownership experience.

The Lincoln Approach

Lincoln has taken a proactive stance by offering features like hands-free driving and remote connectivity as part of the vehicle’s MSRP during the warranty period. This strategy not only enhances the luxury experience for the initial buyer but also positions Lincoln favorably in a competitive market. By including these features in the purchase price, Lincoln aims to attract buyers who are willing to invest in a premium vehicle without the burden of ongoing subscription fees.

The rationale behind this strategy is clear. Lincoln recognizes that many luxury vehicles are traded in or leased within a relatively short timeframe—often within four to five years. By providing complimentary access to premium features during the warranty period, Lincoln is betting that the initial buyer will appreciate the value of these features, while also setting the stage for potential revenue from subsequent owners who may be more amenable to subscription costs.

The Long Game

Lincoln’s strategy is not just about immediate sales; it’s about cultivating a long-term relationship with its customers. By focusing on the primary buyer, Lincoln can create a luxury experience that resonates with their expectations. Once the vehicle changes hands, the automaker can then tap into a new revenue stream from second-hand owners who may be more willing to pay for subscriptions to maintain the luxury experience.

This approach is not without its challenges. Automakers must carefully consider which features to include in the base price and which can be offered as subscriptions. As Volvo’s Chief Technology Officer, Anders Bell, pointed out, customers are generally resistant to paying for features that they know are already present in their vehicles. However, features like internet connectivity or streaming services may be more palatable as subscription options.

Finding the Right Balance

The automotive industry is still in the process of determining where to draw the line between included features and subscription services. Some automakers, like GM and Tesla, have adopted a mixed approach, offering certain features as part of the purchase price while charging for others after a trial period. For example, GM’s Super Cruise is available for a fee after an initial complimentary period, while Tesla’s Full Self-Driving feature can be purchased outright or subscribed to monthly.

Lincoln’s decision to include premium features in the MSRP during the warranty period is a strategic move that aligns with the expectations of luxury car buyers. By doing so, they not only enhance the buying experience but also create a potential revenue stream from future owners who may be more inclined to pay for subscriptions.

Conclusion

As the automotive industry continues to evolve, the resistance of premium vehicle buyers to subscription fees presents a significant challenge for automakers. Lincoln’s approach of incorporating the costs of premium features into the MSRP reflects a growing understanding of consumer preferences. By prioritizing the initial buyer’s experience and strategically planning for future revenue from second-hand owners, Lincoln is positioning itself as a leader in the luxury automotive market. The question remains: how will other automakers adapt to this shifting landscape, and will they follow Lincoln’s lead in redefining the luxury car buying experience?