Driving Profits: The Automaker's Guide to In-Car Subscription Success Models

In the contested terrain of in-car subscriptions, Audi's strategy of gating basic features has sparked debate, highlighting the industry's need to provide unique value through technology ecosystems and third-party innovations, instead of stifling consumer satisfaction.

George Skentzos

Head of Customer Experience
 @ Loopit.co

Published on 

March 15, 2024


Last updated on 

March 18, 2024

Key Takeaways

  • Audi has introduced a subscription model for European buyers of its refreshed A3
  • Despite the global popularity of subscriptions, automakers need to provide added value instead of gating already existing features
  • Automakers should transform their technology ecosystems and enable third-party developers to create unique, hardware-enabled car apps

Audi's recent announcement heralds a new era for the storied German brand, and not in the way that gets car enthusiasts' engines revving. Their refreshed A3 for European buyers doesn't just unfold the next chapter in premium compact riding—it unfolds an era of "functions on demand." That's right, Audi's taking a page out of the in-car subscription playbook, and the outcome will likely read as a cautionary tale of modern-day monetization.

In a move that seems like déjà vu all over again for anyone who followed BMW's short-lived heated seats subscription, Audi's latest pitch is remarkably similar.

The Big Question: Why?

As the automotive sector seems determined on reshaping itself in the image of Silicon Valley's subscription utopia, one can't help but wonder: Why can't they get it right?

The allure of recurring revenue is strong, sure, but at what cost? Audi's latest move seems less like an innovative leap and more a plunge into a market increasingly valuing fairness, transparency, and the outright ownership of a car's capabilities.

We get it. The world loves subscriptions. From binge-watching Netflix to streaming Spotify's endless catalogs, recurring payments have become a staple of our digital lives. Cars are the next frontier to go subscription-based—Loopit is a testament to that—but it has to take a customer-centric approach.

Finding a Path Forward

If carmakers are keen on transforming our vehicles into rolling Software as a Service platforms, they'll need to reevaluate their strategy. The goal can't simply be to gatekeep existing features but to provide genuine added value.

Automakers could learn a thing or two from the tech world here. Yes, we pay for Spotify and Netflix, but the value proposition is clear: vast libraries of content at our fingertips, offering far more than we could individually own.

But Audi's latest move is akin to Netflix or Spotify charging a fee to adjust the volume.

The challenge for car companies is crafting similar value through in-car subscriptions without resorting to holding basic functionalities hostage.

Creating Customer Value with In-Car Subscriptions

One beacon of hope could be reinventing the automotive technology ecosystem. Instead of trying to out-innovate Silicon Valley at its own game—a battle they're frankly ill-equipped to win—automakers should focus on what they excel at: building great cars.

By opening up their platforms to third-party developers and charging for access, not only could they foster innovation, but they'd also share in the spoils.

Imagine apps that manage parking payments seamlessly or augmented reality for navigation, all tapping into hardware enabled from the factory floor. Such value-added services could transform the in-car experience, creating a win-win for developers, automakers, and drivers alike.

But let's make one thing clear: For any of this to work, these services need to feel like genuine enhancements, not essentials tucked away behind a paywall. It's high time automakers realized the difference.

As Audi embarks on this risky path with its A3, the reception to its "functions on demand" will serve as a litmus test for the industry. Will drivers embrace a future where every little comfort comes with a fee, or will they push back, demanding the freedom to enjoy their cars without an ongoing financial tether?

About the author
George is the Head of Marketing and Customer Experience at Loopit. Having originally started his career as a motoring journalist and founding team member for one of Australia's top automotive startups, George has a strong passion for automotive, business and growth marketing.
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