Global carmakers have opened their eyes to “subscribe.” It is changing the function that was provided as an option when selling the vehicle to pay for subscription on an annual or monthly basis. It is the function update using OTA that made it possible to change.
Car manufacturers are active. If consumers step into the subscription service, it can have the effect of preventing customers from leaving. At the same time, it will be possible to create a new profit model.
According to the automobile industry on the 10th, Mercedes-Benz is considering providing rear wheel steering functions (rear axle steering) of EQS as a form of subscription. It provides functions through OTA updates to customers who pay a subscription fee separate from the vehicle purchase price. Using the rear wheel steering function, the rear wheel, which is bent at an angle of 4.5 degrees, can be bent to 10 degrees. It is useful for parking or making a U-turn by reducing the radius of rotation. It is possible to change lanes stably while driving at high speed.
Benz offers rear-wheel steering for an annual subscription fee of 489 euros (about 700,000 won) in some European countries. However, it is causing controversy because it is planning to turn the functions already installed in the vehicle into paid subscriptions in the future.
Tesla was the first to apply the subscription service to cars. In July last year, it started to provide its own self-driving function ‘FSD (Full Self Driving)’ for $199 per month. FSD is an autonomous driving function that is one step higher than autopilot.
Like Tesla, subscription services that automakers pay attention to are still focused on autonomous driving functions. The function that General Motors (GM) planned to apply the subscription service in October last year is also a semi-autonomous driving function called “Ultra Cruise.” Volvo will also apply ‘Ride Pilot’, which provides level 3 autonomous driving, to electric sports utility vehicles (SUV) in the future as a subscription form.
In the automobile industry, once the subscription service is established, a new market will emerge that surpasses existing vehicle sales profits. The Korea Automobile Research Institute estimates that if the adoption rate of subscription services for various functions increases to 30%, the annual operating profit of the service sector will reach 118 billion dollars. If the function provided as an option is converted into a subscription form, it can also have an effect of preventing customers from leaving.
Consumers can buy and use functions that had to be paid at the time of release of the vehicle on an annual or monthly basis whenever necessary. However, if the necessary function is used for a long time, the cost burden may be higher than when the previous option is entered.
The digital content industry is also paying attention to subscription services of automakers. Music streaming service companies are busily joining hands with carmakers. Genie Music has installed streaming services on vehicles such as Hyundai Motor, Kia, and Tesla. Melon is also expanding its scope of collaboration with Hyundai Motor and Kia.
If self-driving performance is strengthened and the driver has more time to do other activities while driving, there is a high possibility that the subscription area will expand to videos and games. Jang Dae-seok, a senior researcher at the Korea Automobile Research Institute, said, “Content services in vehicles may inevitably compete with existing OTT or streaming platform operators, resulting in a so-called ‘Big blur phenomenon’ in which boundaries between industries are broken.”