Car feature subscriptions should be illegal, New Jersey Legislators say
arstechnica.com
arstechnica.com
I’m amazed a car manufacturer could resort to these games. If they want to increase profits, why not just focus on customers and give customers what they want?
I recently tried to purchase a luxury SUV and after 8 months, I gave up. I wanted a model with a specific color and options, all these things were clearly advertised on the manufacturers website if you looked at the specific vehicle’s page.
No car dealer had the vehicle on the lot in this configuration. Every single one of them pressured me into purchasing what they already have, and paying a $3K-$4K mark up over MSRP. I tried contacting the dealer directly, and they simply told me they can’t help me, period, and my only option is to talk to the dealer.
Meanwhile the dealer told me that even if I can find another dealer in the state who is willing to sell the exact vehicle without the mark up, this dealer has first pick on any new allocation, because they sell the largest volume, and they’d make sure they get the vehicle and not anyone else. So… the manufacturer doesn’t care, and the dealer doesn’t even hide their slimy tactics.
The name of the game now in more and more industries is rent-seeking and extracting money long term, on a regular basis. This new business practice disincentivizes building quality products because then you can sell a shoddy product and include "maintenance" and "updates" into your subscription plan.
If it's not stopped legally, it'll only get worse.
In competitive industries, customer-hostile choices are much less common.
How many brands of TV are there? How many of those brands still make even one consumer model that isn't "smart" in user-hostile ways?
Having lots of suppliers doesn't necessarily create effective competition in the customer interest. If there's a customer-hostile practice that makes lots of money and is sufficiently obvious that all suppliers can adopt it without any need for legally questionable forms of cooperation then what is going to happen?
Effectively forcing subscriptions or other after-purchase limitations and costs on customers when there is nothing in it for those customer to balance what they lose is exactly the kind of predatory behaviour that government regulation should protect against.
Subscription predation is poorly regulated. Starting with cars seems like an obvious target.
recurring revenue is what you're talking about, it's a financially desirable thing for them, but it's not the same thing as rent seeking. Rent seeking is not receiving payments over and over on a regular basis, rather it's a term economists use to mean making money from your position in the market without contributing anything of value to the market (without putting in any work, so to speak). For example, "monopoly rents" are the extra parts of the prices that monopolies can charge because they face no competition.
add-ons to a major expense like an automobile can qualify as rents because once you buy the car, you are essentially trapped into buying the add-ons from the one manufacturer, like being forced to get your car serviced at the dealer.
In the past year you probably weren't getting any build to order vehicle with a reasonable delivery time. They'd probably take your deposit but you might wait a year.
But what people don't talk about much is how recruiters and real estate agents belong on the same list.
These are the kinds of games that causes Tesla to not sell cars directly to people in Texas. Want to sell a car in Texas? Got to have a dealership and the games that come along with that. You're not allowed to make a product and sell directly to the consumer when it comes to autos. That's how we do it in the business friendly state of Texas!?!?
Yes, you wait. You may be waiting quite a while for a dealer to give you one of their allocations. But you get exactly what you want. If you go around to dealerships and make it clear you're serious, you'll even pay no more than you would otherwise. Negotiate price no differently. This market is a bit of a nuisance, but even now the vet salespeople will still play ball, because someone that serious is actually an easy sale. They'll still sell what's on the lot or floor plan, but now they just sold ANOTHER car. Know several people recently who've done just this.
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Not limited to luxury vehicles either. Had someone at somewhere I was doing consulting for ask me about how he'd go about it for a Subaru Legacy, in the base trim, with ALMOST NO OPTIONS. He wanted exactly what he wanted, and nothing more. Told him just to go do it.
He did. He waited about 4.5 months (because it had to be built per the build schedule, then shipped on a boat!), but he got exactly what he wanted, for the price he asked for. To him it was completely worth not having it, "right now". He told me that after seeing how relatively little work was involved, he'd never buy a car off the lot again.
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Average sale price of a new car in the US is $48K. People regularly pay $60-130K (or far more!) for luxury cars. Sorry, I can't compromise on something with a 5-digit (or 6-digit) price tag.
Unless it's a Rolls Royce, a brand new model or facing significant supply shortages, there's almost no point in ordering a new car from the factory. Cheaper and faster to buy a lightly used one, generally it's trivial to find fully optioned examples.
Especially because when dealers order 300+ cars in one go (for the next few months) to stick on their floor plan, they aren't getting weird with options. They stick to what they know sells, with options the average buyer wants (or won't balk over), and hits their revenue and margin targets. To most people cars are an appliance. There's only a few configurations they're going to order. Moreover, it's rare for them to order a stripped out model -- they're not popular with buyers, and less gross margin.
You can search national inventories, find the exact car sitting somewhere and go get it. Hell, most local dealerships who DON'T have the car themselves will be more than happy to trade something they have to the dealer (of the same brand) that possesses what you want so they get the sale. Make some phone calls, and one will play ball and do most of the work for you.
Point was sometimes there isn't a free lunch, especially if a person is going to be particularly choosy about the specifics of what they want and be salty over anything else.
I once ordered from a dealer, left a deposit, waited 3 months (with no car at the time so busses and friends), they claimed it came in on a Sunday. I said I'd be in Monday morning since my bank is closed on Sunday. They sold it to someone else, told me I could order again and wait another 3 months if I wanted.
Since the deposit wasn't tied to a VIN or something there was nothing I could do.
American culture is all about the price being the price. With dealerships, you're haggling just to get the price down to the normal goddamn price, just because of middlemen.
I am happy to pay The Price if it means no bullshit and an assurance I'm not getting screwed. Make your car decisions based on the merits of the vehicle.
Variable sales tax rates depending on locale / product / usage / other arcane rules; variable tipping rates based on type of service rendered, customs, etc.; services charges, delivery fees, resort fees, convenience (of printing your own ticket) fees, so on and so forth...
No, I think Americans are quite used to not just paying list price.
Meanwhile though, literally everything done by people living in young urban "gentrified" areas seems to involve tipping.
Sadly it always remained aspirational as I never could quite bring myself to justify spending that much on a car I’d barely use.
* buy off the lot, and get a discount
* they could buy from another dealer for me out of state but then there’s transport costs etc so it’s less cost effective
* factory order
And they didn’t care if I wanted to factory order and they were stuck with the cars on their lot, they’d facilitate it.
But, making any feature already built into the car that doesn't have an operational cost, paid, should be illegal. Example: heated seats, CarPlay (given they aren't actively adding more features) etc.
But at the same time, is this a problem best solved by a legislature? Or the market?
Government regulations are useful when they protect our safety, health, prevent monopolies/collusion, and so on.
But do we really want the government dictating companies' business models? Dictating whether cars can be owned vs. leased, or features can be owned vs. leased? I'd much rather consumers just don't subscribe to these features, and then the car manufacturers abandon the strategy.
Legislation doesn't feel like the solution here.
Sure, if the consumers actually do have the choice. The heated seats are pre-installed and you pay for it, whether you activate the subscription or not. You can't choose a cheaper, non-heated seat, as far as I know.
As an individual consumer, you don't have that much leverage or power. As a group of consumers, aka voting citizens, it's easier to handle such rent seeking businesses practices through legislation.
From what I've read, on models where a feature is standard, BMW doesn't charge a subscription. It's only available as a subscription when it is an option, making it obvious you aren't paying for it except in the subscription. I think their idea was to make it so different people can lease the same car and pick different options essentially.
The cost of the heated seats has to be covered by the actual purchases of that option, otherwise they'd be selling a car without heated seats for the price of one with them, at which point the car is overpriced.
If car manufacturers could just arbitrarily charge more, then they would do so anyway, seat heating hardware or not.
Paying $12k for a feature which 1% of the time will try to kill you is stupid. Because you're going to use that feature more than 100 times for sure, if it is worth $12k.
Classic example is MS Windows. Unpatched windows disrupt everyone’s lives with DDOS attacks, so MS is painfully aggressive at forcing free updates.
Sure, it’s an expensive process, but maybe it would persuade Tesla to invest more into their quality control.
Why should this be treated differently than any non-software bug that causes death? I am not aware of any car manufactures that send mechanics to your home to replace your airbags without your consent.
Not exactly a fair comparison. Mechanics coming to your home isn't economical and would require gov policy (and subsidy) to enforce.
I think a better comparison is if the gov acts a policy such that "all new cars much have {update}." As the old vehicles breakdown, everyone is forced to have the new update.
This is a slower process, but has the same end as an OTA update.
Better yet, do both.
2. Cars shouldn’t come by default connected to the internet
3. Cars shouldn’t come with subscriptions to unlock features you own
There’s a lot wrong here …
https://europa.eu/youreurope/citizens/travel/security-and-em...
If you share this guy world view, what he said may have sounded clear, but it may not have been as clear to other people.
We've already accepted that cars can come with artificially locked features, what's wrong with paying to unlock them?
They can help themselves. And you're assisting by being their ideal customer - willing to pay.