Your Used Car May Soon Come With Subscription Fees

Drivers of used cars whom automakers have a direct line to—whether by email or app—are often offered free trial periods aimed at hooking a consumer to the subscription model of car ownership. But many drivers of used cars aren’t so easily targeted, especially those who don’t buy their cars through automakers’ dealer-controlled networks.

A 2021 survey of more than 2,000 US car owners led data and analytics company LexisNexis Risk Solutions to estimate that 83 percent of owners of used cars with built-in connectivity “remain untapped”—meaning automakers had left money on the table.

Since 2021, LexisNexis has offered a service called Owner Check aimed at helping automakers root out used car owners. It can link “disparate data sets” to determine when a car has a new owner, and conversely, when a person has a new car, says Dave Nemtuda, the company’s head of automotive product. The company won’t disclose which automakers use Owner Check, but it says companies accounting for 65 percent of the global auto market are either testing or in discussions about the service.

All of these new subscription offerings create a new way for automakers to compete—and to position their brand in relation to others. Volvo’s deputy CEO Björn Annwall says the company feels it’s unfair to charge extra to simply activate hardware that’s already in a car—“as in the heated seat,” he says—but it’s OK to charge for more complex software. An example of that might be a parking aid that stitches images together from multiple cameras. “This is partly market research, but partly it’s just common sense,” he says.

It’s a reasonable theory, but like the subscription strategies of all automakers, one that’s largely untested. Ondrej Burkacky, a senior partner with the consulting firm McKinsey who works in automotive software, says some industry projections for subscriber counts and revenue have proven to be overly optimistic.

The unanswered question, he says, is this: “What are people really going to pay for?” VW’s Cariad reported a $2 billion annual loss last year, amidst software product delays, and it is not the only automaker that has struggled to build easy-to-use systems. As these companies’ software and subscriber drives expand to owners of used cars, so too will the potential for their hopes to be dashed—or to get people really, really mad.