May 18, 2024

Volvo CEO Jim Rowan has a refreshing approach to automotive monetization, eschewing trends other companies are taking that are alienating customers.

As automakers rush to adopt new technologies and trends — think electric vehicles, advanced infotainment systems, etc — many are choosing to monetize features that customers have already paid for, charging a subscription to unlock said features. Mercedes Benz plans to charge an additional $1,200 annually for customers to unlock faster performance profiles in the company’s Mercedes EQ electric vehicles. Similarly, BMW planned to charge customers $18 per month to unlock the heated seats their vehicles already came equipped with. Fortunately, the company backtracked on those plans after customer push back.

In an interview with The Verge’s Nilay Patel, Rowan made clear he is taking a more cautious approach, rather than blindly following suit in the automotive subscription madness. When Patel pointed out how much Volvo’s competitors are trying to monetize the inside of the car, Rowan had he following to say:

I don’t buy it, quite frankly. I think there’s maybe a bit of inside revenue if you want to go to the upper levels of certain performance or you want to release X amount of performance in the car in terms of acceleration.

When Patel pressed, asking if Rowan had any intention of following BMW’s approach of trying to charge for heated seats, the CEO likened it to updating an iPhone:

No, because I update my iPhone the whole time. I would be pretty peeved if every time I update my iPhone, they gave me a bill. So—

Instead, Rowan sees the outside of the vehicle — maintenance, tires, insurance, cleaning, etc — as a more viable option for automakers and dealers to generate more revenue. Rowan emphasized the need to provide the customer a tangible benefit, and software should only be delivered via a subscription if it can do the same:

Where I do think there is much more opportunity is in those external services, but it’s really clear, if you want your car cleaned once a week and you subscribe to a car cleaning service, you’re going to come back and say, “Wow, these guys have done a great job. Whatever it was, that was $20, I’m going to double down on that,” or, “I really like the fact that these guys come and change my tires or I get great insurance coverage or whatever.” Those are tangible benefits that I think people say that adds value to the relationship between us and our customers. If there are software subscription choices that does the same thing, we would of course go in that direction.

Rowan’s take on the industry is a refreshing one, and certainly one many subscription-weary customers can get on board with.