Why Are Subscription Fees Not Preferred When Purchasing Luxury Vehicles?
Luxury car buyers are not keen on paying recurring subscription fees for built-in features in their vehicles, especially those in the premium segment. Lincoln Brands like are reshaping their strategies by taking this into account. Vehicle buyers prefer to gain the privileges of owning luxury cars at a pre-paid cost rather than with constant additional fees.
Premium Buyers' Choice
Lincoln president Dianne Craig makes it clear why premium buyers don't want a subscription when it comes to owning their luxury cars. Premium buyers expect the costs of features in their vehicles to be built into the price up front. For example, hands-free driving system (BlueCruise) or remote connection They believe that features such as these should be included in the purchase price, at least for the duration of the vehicle's warranty. This becomes an important point, especially for high-priced vehicle purchases.
What is Lincoln's Strategy?
Lincoln’s standard warranty typically covers vehicles for around four years. This period coincides with free trial periods for features like premium connectivity and BlueCruise. Lincoln’s strategy is to provide buyers with a full luxury experience during this time. However, it’s important to note that these services won’t be free forever. After the vehicle’s warranty expires, subscription fees will be charged for these services.
Market Research and Consumer Trends
Many market studies show that luxury brand buyers typically replace their vehicles within five years. Lease terms are also typically around three years. This data makes Lincoln’s goals even clearer. By offering a full luxury experience to first-time buyers, the company aims to capture potential recurring subscription revenue from pre-owned owners who may be more willing to invest in these features.
Negative Effects of Subscription Fees
Premium car buyers are not willing to pay $75 a month for heated seats or $15 a month for extra horsepower after buying a $100 Lincoln Nautilus. This demonstrates the negative impact of premium car purchases. Buyers consistently perceive such additional fees as negatively impacting their car ownership experience.
Remote Connection and Other Features
Modern features like remote control are undoubtedly an attractive feature for premium vehicles. However, offering such features with ongoing subscription fees reduces the desire of buyers to use them. At this point, Lincoln is providing such features free of charge during the warranty period of the vehicle in order to meet the expectations of buyers.
The Future of Vehicle Ownership Experience
In the future, the car ownership experience is expected to shift to a more upfront payment-based structure rather than a subscription model. Buyers prefer to have the cost of all the features their vehicles offer included upfront. This is causing car manufacturers to rethink their strategies and better align them with consumer demands.
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Premium car buyers’ opposition to subscription fees could trigger a significant shift in the luxury car market. Brands like Lincoln reshaping their strategies to address these demands could positively impact future car ownership experiences.
