Securing More Stable Revenue Base Compared to Manufacturing
Product Appeal, Technology, and Consumer Acceptance Require Attention

Analysis has emerged indicating that growth strategies through vehicle feature subscription services will become increasingly important in the automotive industry.

According to the Korea Automotive Research Institute, as semiconductor component shortages and supply chain crises are resolved and complete vehicle manufacturers diversify their product mix, new strategies to enhance profitability will become necessary, and feature subscription services are expected to occupy an important position.

When parts and materials supply chain issues gradually normalize and a "reverse base effect" occurs that reduces profitability, complete vehicle manufacturers will face the need for profitability differentiation.

In this context, subscription-based services can create higher-margin markets compared to traditional manufacturing when technological and institutional foundations related to autonomous driving and connectivity services stabilize, and also provide utility value.

Through subscription services, companies can establish stable revenue bases on a weekly or monthly basis that could not be generated from existing manufacturing, and can improve efficiency in production automation and three-dimensional logistics by reducing mixed-model production during vehicle manufacturing.

Hyundai Motor provides remote control, safety security, vehicle management, navigation, and music streaming through its "Bluelink" service. Tesla has launched subscription services including "Full Self Driving," which provides Level 2 autonomous driving capability, and "Connectivity Package," which provides video and music streaming.

The Korea Automotive Research Institute stated that the success of vehicle feature subscription services depends on product appeal, technology, and consumer acceptance.

From a product appeal perspective, unlike one-time vehicle sales, feature subscription services after purchase are re-evaluated by consumers at each billing cycle, so the company's philosophy on user experience and service improvement cycles are expected to become important. Additionally, subscription services related to entertainment are likely to gain consumer selection only when distinctly differentiated from mobile devices.

In terms of technology, the competitiveness of foundational technologies for providing feature subscription services, such as OTA and integrated operating systems (OS), is expected to emerge as a core competitive factor for each complete vehicle brand. Accordingly, qualitative improvement in software technology that affects user experience of feature services is necessary.

Consumer acceptance also requires careful consideration. When vehicle safety-related features such as ADAS appear in subscription service form, apart from the service's economic viability, negative perceptions of "selling safety" may spread and consumer complaints may arise.

Meanwhile, the Korea Automotive Research Institute stated that such services can also have positive effects for consumers. While consumers previously had to pay in advance for desired options before vehicle delivery, subscription services allow usage only when needed, reducing economic burden, and enable temporary cancellation and re-subscription, expanding options for vehicle features.