BMW backtracks: Automaker will no longer charge monthly fee for heated seats
The German automaker took a lot of heat for charging subscription fees for certain features
BMW (BMW.DE) is backtracking on a controversial tactic — charging a monthly fee or subscription to activate hardware-based features in its cars such as heated seats.
According to a report from UK-based Autocar, the German automaker decided to end the policy for activating physical features that a customer didn’t buy initially — known as “functions/features on demand” (FoD) — because it upset customers.
“What we don’t do anymore — and that is a very well-known example — is offer seat heating by [subscription]. It’s either in or out,” BMW board member for sales & marketing Pieter Nota said to Autocar. “We thought that we would provide an extra service to the customer by offering the chance to activate that later, but the user acceptance isn’t that high. People feel that they paid double — which was actually not true, but perception is reality, I always say.”
Earlier this year BMW caused a massive stir when it introduced subscription pricing for heated seats in its cars, when the option wasn’t purchased originally. The rub here is the actual heated seat is built into most BMWs.
Though this feature was only turned on in international regions and not the US, many BMW fans and auto enthusiasts were incensed at the prospect. The car comes with the feature built in — "Why should buyers pay just to turn it on after the fact?" was the most common complaint.
Independent customer surveys also found this practice was off-putting to buyers. A study conducted by Cox Automotive in May found that 75% of respondents agreed with the statement that “features on demand will allow automakers to make more money,” and 69% of respondents said that if certain features were available only via subscription for a particular brand, they would likely shop elsewhere.
BMW’s Nota did say however that the company would expand on its FoD or subscription pricing for certain software features like self-driving, driving aids, and infotainment options.
“What we find is software-based services, like downloading a parking assist product, is very well accepted,” Nota said. “People know it’s a certain piece of software they can download that costs money. It’s the same as downloading a film or an extra feature on an app.”
In a statement to Yahoo Finance, a BMW USA spokesperson reiterated that subscription features for heated seats was never an option for the US market, but added, "We will continue to refine the Connected Drive offerings to make the latest technologies available to our customers and meet the demand in the markets."
Why subscription features are here to stay
Tesla was a pioneer in the space of utilizing subscription features (and collecting “connected” fees) for features on demand like Autopilot and the more advanced full-self-driving (FSD) beta feature. Now that many automakers have that success and modeled collecting subscription fees as new streams of revenue, the pressure is on to make those initiatives successful.
“I don't think [features on demand] is going away, and also as the cars get more and more sophisticated, get more and more functionality, then it just feels like a natural progression,” Edmunds editor in chief Alistair Weaver told Yahoo Finance earlier this summer. “GM has been very open about it; Ford is working on it. So this is the new frontier of how to generate revenue.” In fact, GM has said it intends to pull in $20 billion to $25 billion in annual subscription revenue by 2030.
One thing owners do like, however, is a free trial to see if they like a certain feature before plunking down a credit card. A survey conducted in July of this year by S&P Global Mobility found that 82% of respondents who had experienced a free trial or existing subscription “would definitely or probably consider purchasing subscription-based services” on a future new car buy.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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