The concept of paying for access to services rather than buying them outright has been around for hundreds of years starting with magazines in the early 1800s and, according to Barclaycard, most of us in the UK now have an average of 7 subscriptions across a range of sectors.
This week the latest evolution of automotive and mobility subscription services has hit a bump in the road with the spotlight on software subscriptions for services in cars. Paying a monthly fee to use a vehicle is predicted to reach $30-$40 billion (€26-€34 billion) by 2030 and could account for up to 15% of new-car sales. Players such as Onto, Pivotal (Jaguar Land Rover), Care by Volvo, Genesis, Elmo, Wagonex and Mocean (Hyundai) are now established in the market.
However, BMW’s latest OTA Software Subscription provided through the ConnectedDrive app has highlighted the challenge of trying to introduce new commercial models to consumers. Whilst it may seem logical for people used to buying Netflix subscriptions to take the same approach to accessing features in their cars, there is clearly work to be done before it achieves mainstream acceptance, And that’s where the historical automotive expertise in marketing strategy needs to come into play to drive the transition towards mobility.
Think back to the 1990s, when Ford introduced the ‘Options’ approach, the first PCP that opened the market to new cars for people who couldn’t (or didn’t want to) pay the full price to buy the car. The marketing insight and leadership created the PCP and unlocked the new car market, still driving the vast majority of sales today.
At Ennis & Co we meet many of the brightest and best marketers across the world in our work to support organisations. It will be fascinating to see how they address the challenge of unlocking the software subscriptions market.
