| Seeking a slice of the Apple model |
Automakers envy Apple.
Every year, tens of millions of U.S. consumers pay premium prices for Apple’s phones and computers. Then they use those devices to buy apps and subscribe to various services, with Apple typically getting a cut of the revenue.
Within a couple of years, most of those customers then upgrade to a next-generation device, often without even considering a rival brand, and the cycle starts anew.
That hugely profitable business model — and Apple’s nearly $3 trillion market cap — has just about every major player in the auto industry dreaming of new ways to generate recurring revenue streams through in-vehicle software and connectivity. The numbers they project are huge — $25 billion for General Motors and $23 billion for Stellantis by 2030. Ford Motor Co. CEO Jim Farley, one of the 2021 All Stars featured on the front page of this week’s issue, is working to create what he calls an “always on” relationship with customers to get more revenue rolling in.
But can automakers really persuade customers to open their wallets like Apple has?
Many consumers already are making monthly subscription payments to stream music and movies, join live exercise classes, date and remotely monitor their front porch. Will they also pay to get a little more horsepower, advanced driver-assistance technology or other features in their cars? Some brands are even toying with the idea of charging a monthly fee to let drivers fire up their heated seats.
Retailers such as Lithia’s Bryan DeBoer — our Industry Leader of the Year recognized last week — undoubtedly will be paying close attention to see whether these efforts succeed and ensure that dealers are included in the strategy.
A story on Page 1 of this week’s issue explores auto executives’ subscription ambitions, and we at Automotive News intend to keep readers informed as these plans develop over the coming decade.
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In Monday’s Automotive News:
The latest on Carlos Ghosn: Last time we heard from indicted former Nissan Chairman Carlos Ghosn, he dished plenty of trash talk about Nissan, branding it a “boring” company “no one cares about” and calling its 22-year alliance with French automaker Renault a “zombie” that will soon keel over. Now, from his Lebanon refuge, Ghosn has given an online press conference at the Foreign Correspondents’ Club of Japan where he once again took aim at his former company, this time for moving too slowly on electric vehicles — a segment Ghosn bullishly pursued a decade ago, with modest results.
Kia is on a roll: Kia is guaranteed to break its all-time sales record in 2021 despite the chip shortage. And future products suggest even more growth is coming in 2022. Customers are already signing up for the redesigned 2023 Sportage compact crossover that will launch in the first half of 2022 with a significant increase in size. Customers are really starting to notice other Kia offerings as well: Kia outsold sibling brand Hyundai in November and is close in overall year-to-date sales.
Weekend headlines
VW, Bosch to cooperate on automotive software, report says: Software is key future battleground, ranging from self-driving tech to over-the-air services.
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Toyota to build $1.3 billion U.S. battery plant: The automaker said the factory in North Carolina will eventually produce enough lithium ion batteries to power up to 1.2 million vehicles a year. It’s expected to begin production in 2025.
Biden looks to reshape federal vehicle fleet: The president signed an executive order to end the purchase of gasoline-powered vehicles for the federal fleet by 2027. The U.S. government owns more than 600,000 vehicles.
BrightDrop opens first dealership: GM’s electric delivery van brand opened its first dealership, run by Chevrolet-Buick-GMC dealer Mike Caposio in Southern California. BrightDrop Greater Los Angeles is located in Fontana, Calif.
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Dec. 14, 1950: Date of birth of Ed Welburn, who retired in July 2016 as General Motors’ head of design after a 44-year career with the automaker. Welburn grew up idolizing automotive designers Harley Earl, Sergio Pininfarina, Bill Mitchell and Chuck Jordan. In 2017, he joined those legendary names in the Automotive Hall of Fame. “They’ve been my heroes all my life,” Welburn told Automotive News. “I can’t even say I stand among them — it’s that humbling — but to be listed among them is a huge deal to me. Just think of the cars that they have designed.” Welburn, the first person to oversee all of GM’s design centers around the world, can claim more than a few notable cars to his name as well, including the Chevrolet Corvette Stingray, two generations of the Camaro and show-stopping concepts such as the Cadillac Ciel and Buick Avista.