WardsAuto: OEM Subscription Plans Could Revolutionize Auto Industry

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June 11, 2018—While most OEM vehicle subscription services are in their early stages, a new report from WardsAuto said these could provide a major benefit for dealership service operations. To compete with independents, however, WardsAuto said the OEMs will need to find ways to lower the cost of maintenance.

In this new model, WardsAuto wrote, OEMs gain control over the entire vehicle lifecycle from design to sales and service networks. The subscription models move service costs (which are normally billed to customers) into an monthly fee, creating new value for the OEM system. As this network takes shape, WardsAuto said OEMs will need to extend their systems and vehicle configuration knowledge into a focus on service to optimize vehicle maintenance.

OEM subscription services almost always include regular maintenance from a dealership, which could be a significant threat to independent automotive repair shops going forward.

The benefits for customers with these programs is that they can avoid waiting at dealerships and taking time from family or work by booking appointments. As premium vehicles generally require a premium service visit to a dealership or authorized shop, unplanned expensive maintenance costs could be alleviated.

This comes on the heels of a recent BMW announcement of Access by BMW, offering a form of mobility-as-a-service at two pricing tiers ($2,000 per month for a range of 5 Series and X5 vehicles, and stepping up to $3,700 for its M performance versions) which offer the vehicle, maintenance and insurance as one package. BMW joins other recent subscription programs by Volvo, Lincoln, Cadillac and Porsche.

Mercedes recently revealed its subscription program, which offers services from $1,095 to $2,995, and allows customers to switch out vehicles when desired. In March, CNBC took an inside look at Porsche’s subscription program, and found it may be providing a boost to the company’s growing sales, and could be attracting younger drivers.

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