Bayerische Motoren Werke AG (DE:BMW) has started selling heated seats and other special features for a monthly subscription-based fee.
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The subscription-based model is available in some countries, including the U.K., Germany, New Zealand, and South Africa. This implies that despite having the feature in the car with the required hardware, the owners can use the same only for a subscription and not otherwise.
With its three brands, BMW, MINI, and Rolls-Royce, the BMW Group is the world’s leading premium manufacturer of automobiles and motorcycles.
BMW’s Subscription Plan
Under a one-month, one-year, three-year, or unlimited plan, customers can avail of heated seats for approximately $18 in the U.K., $30 in New Zealand, $15 in South Africa, and $17 in Germany, as per the information on the company websites.
The owners also have an option to enable all hardware features, available at the BMW’s ConnectedDrive online store, for a one-time payment versus a monthly subscription model. The owners can activate the features from their homes without having to go to the store.
BMW stated that the subscription model allows owners to avail of the features at a later date, even beyond the purchase date. It comes with a short-term trial option that can help owners make their decision before making a full purchase.
Furthermore, the company added, it is a great add-on for second-time car owners who can avail the features which may not have been used at the time of purchase.
The subscription is available for other features too, like a heated steering wheel, automatic high-beam headlights, active cruise control, etc.
BMW Faces Social Media Backlash
The move was heavily criticized on various social media platforms, including Reddit and Twitter (TWTR), inviting a volley of posts from various communities.
Most tweets ridiculed the move, saying that they may now start charging for basic features like the indicators, etc. Other tweets focused on how to hack the systems and get a way to use the features without having to pay for them.
Some other tweet stated, “subscriptions for software is one thing, no one is going to subscribe for heated seats or whatever, if I own the car I own everything in it.”
Wall Street’s Take on BMW
Overall, the stock has a Moderate Buy consensus rating based on eight Buys and seven Holds. The average BMW price target of €102.11 implies 40.88% upside potential from current levels. Shares of BMW have lost 18% over the past year.
TipRanks’ Smart Score for BMW
BMW scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Conclusion
BMW is not the only auto giant that has commenced the subscription model but is following in the footsteps of the larger industry-wide trend where companies like Lexus and Toyota are engaging in after-sales service for incremental revenue generation.
Seeing the huge backlash worldwide, maybe BMW and other carmakers will decide to withdraw the subscription-based plans.