Mercedes Takes Swipe at BMW for ‘Milking’ Customers with Subscription Fees

Mercedes Offers Paid Features Alongside Standard Options

Automobile manufacturers have recently adopted a novel method of generating revenue: subscriptions. Similar to purchasing downloadable content for a video game, in-car subscriptions enable customers to upgrade their vehicle’s capabilities after the initial purchase.

Mercedes-Benz provides various in-car subscription options. However, the company’s Chief Software Officer, Magnus Ostberg, didn’t hold back when criticizing BMW’s choice to charge an additional fee for heated seats during an interview with Top Gear magazine.

According to Ostberg, Mercedes has a unique strategy in providing a “luxury and comprehensive experience” without resorting to “petty charges for our customers.” He further acknowledged that although Mercedes does offer subscription options, their patrons have expressed a strong aversion towards being subjected to constant and excessive fees.

In the year 2022, BMW sparked controversy due to its latest offering. The company introduced a subscription service for heated seats in their vehicles. Despite the fact that the cars were originally equipped with the necessary hardware, the feature was locked behind a payment barrier. Customers who did not opt for heated seats at the time of purchase could still access them by paying for the functionality after receiving their car. Yet, this decision faced heavy criticism and resulted in a low adoption rate, leading BMW to ultimately discontinue the controversial subscription plan. However, the luxury brand continues to provide various other features that require additional fees.

In 2021, Mercedes stirred up a bit of controversy with the introduction of a subscription program for its enhanced rear-wheel steering system on the EQS. The luxury sedan typically comes equipped with a 4.5-degree steering angle at the rear in certain regions, but drivers have the option to pay an additional fee for the full 10-degree steering capability. Interestingly enough, the more advanced system comes as standard on the EQS models sold in the United States. It should also be mentioned that there is a subscription service available for accessing increased power on specific EQ vehicles.

When it comes to additional features available after purchase, both car manufacturers have a wide range of options. Mercedes offers an Excellence Package which includes 22 “digital extras” such as auxiliary heating/ventilation, remote door locking/unlocking, and remote window/sunroof control. In addition, customers can choose to add on digital radio, headlights with adaptive high beam, adaptive cruise control, and other features for an additional cost. The complete list of options can be found here, although availability may vary depending on the country, model, and existing hardware in the vehicle.

In the UK, BMW boasts a wide selection of products in their store. The German company presents various options such as adaptive cruise control and high-beam assist, as well as the integration of Apple CarPlay and adaptive M suspension. Customers can also opt for subscriptions to map updates and artificial engine sounds, along with bundles that include specific driver assistance and safety systems. It should be noted that certain items offer the choice of monthly or yearly payment plans, while some require a one-time fee to permanently unlock the feature.

According to automakers, subscriptions have the potential to become highly lucrative assets. Stellantis, for instance, has projected a significant increase in profits, expecting to generate an extra €4 billion per year by 2026 through its “monetizable connected cars.” This figure is predicted to skyrocket to €20 billion annually by the conclusion of the decade.

Purchasing a subscription to unlock a feature that relies on pre-existing car hardware is a difficult concept to accept. However, it appears that car manufacturers are confident that consumers will consistently pay for access to this blocked functionality, either monthly or yearly. According to a study conducted by S&P Global Mobility in the previous year, a staggering 82 percent of those surveyed expressed their willingness to obtain a subscription.

Source: Top Gear