BMW has telegraphed in the past that they will make some comfort options available by subscription. In South Korea, that day is now.
Features like High Beam Assistant, Adaptive Cruise Control, Lane Keep Assist, and even heated seats can be paid for month-by-month. At $8.41, a year of High Beam Assist will run you $100.92 (132,000 Won), or order it for the year and the discount brings it down to $84.10. A year of Driving Assistant Plus will run $389.86.
Questions for the consumer are obvious: What if the terms change? What if I sell my car? Give the car to my kid?
The questions for the dealership are much more pointed: Will BMW eliminate dealer markup on options? Will my dealership get any payment when an owner subscribes to a feature after the sale (or lease)? If I take in a trade with these features paid up through the year or through “Unlimited” paid up indefinitely, will they be removed?
Anyone acquainted with the franchise retail dealership model knows that the most lucrative part of the actual purchase is in financing, insurance, and accessories.
However, in the retail pricing, options have a much higher percentage of markup than the base vehicle. Are dealerships to be stripped of that potential profit?
Franchise dealerships have already seen markup from invoice slashed, reducing their front-end profit on a new car to as low as 2.5%. Options, at least, still offer as much as 10%. It’s the main reason models in short supply are ordered “loaded up.”
If the manufacturer can bypass the dealership for these higher profit added features, it will further eat into dealership profits, especially in the front of store area, the one place a franchise dealership has a captive audience and an advantage over third party businesses like repair shops, parts stores, and even Walmart.