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      07-11-2022, 09:30 PM   #23
cooolone2
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What point am I trying to make? Can't see how it's missed!

Let's see, how about a sneaker manufacturer charge you for each step you take! Charge more on a subscription basis because you actually run with the sneaker! Maybe cell phone manufacturers will charge per call, not your carrier, but the phone manufacturer! Or charge additional for being able to play music through it's speakers and not just voice calls! A LCD TV manufacturer charge you per view, again, not the cable service or provider, but the actual TV people. Or limit capability by subscription.

It's not a WIN for car owners, it's ridiculous! They want to make everything on their production line vanilla, ie, the same, ok. So the capability is already there in each vehicle as it streamlines and simplifies production in the fact that each car isn't different, but the same. What changes is what's used or utilized by the owner or occupants at the time. Ok, yeah, cool, sounds cool. But only if it's not your car that you've purchased! Might as well just lease every vehicle, and this business model makes sense. When I purchase it, it becomes my property, you don't retain any rights over it. And actually with the Advent of the "smart car" paradigm, there's been some big deals and fighting over who owns the "DATA" the vehicle is producing. Like your usage habits, travel, etc... All something nobody is talking about, which in my opinion is a serious invasion of privacy!

But back to the "subscription" model. Yeah it works for some, it works for businesses, it works for those who don't keep their cars and lease, and it works to make cars attractive at a seemingly lesser cost, but that's belongs in the same group of people financing a depreciating asset over 7 and some even 8 years now.

It's all moot in a way because the option to "buy" hasn't really been eliminated. For now...

I put this in the same class as those involved with the exterior design changes that emphatically deny is a detriment to the brand! They're too smart for themselves... But only the future will tell what's going to happen. I do believe some sales figures have already shown a downward trend...

Regards

Have a great day!
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      07-11-2022, 09:35 PM   #24
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Quote:
Originally Posted by Equilibrandt View Post
Silver lining here:

If the cars comes with the Active Cruise Control radar, heating coils, etc. and you just have to pay to enable them, over the air...
Assuming BMW doesn't discontinue connected drive on the vehicle you want leaving you permanently locked out of those features. They disabled all the connected services on my E9X 3 Series while I owned it and gave me a $200 gift card or something in return.

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Originally Posted by Equilibrandt View Post
That could mean that when you buy a clean, used example of whatever car/color you want, you can technically spec it out however you want, as opposed to playing the Goldilocks game of finding the perfect car with all the packages you wanted.

Owner didn't get ACC, ventilated seats, blind spot detection subscriptions when they bought/spec'd it? Doesn't matter, you're the owner now and can enable the features you want.
If the vehicle is off warranty you'd have no way of knowing if any of these features are even functional until you purchase them or start paying the subscription. They could all be broken and you wouldn't even know. So you'll have to buy them first and then pay for any necessary repairs.

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Originally Posted by Equilibrandt View Post
To be honest, even if this became a thing in the US, I'm sure most BMW buyers here would just pay the fee for "Lifetime" CarPlay, heated seats, adaptive cruise, etc. Just like they do now when building and ordering a car.
A huge number of BMWs are leased for 36 months and the 3 year subscription being priced just slightly below the "unlimited" is clearly to incentive people leasing new cars to subscribe. All of those off-lease cars will have their features disabled. Also if you're buying a car from a dealership and the previous owner bought "Lifetime" CarPlay and BMW just disables it anyway, how would you know? They could do that with every car that comes through the dealer.
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      07-11-2022, 09:42 PM   #25
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Originally Posted by TheBingoBalls View Post
I think everyone is getting worked up because they read the work "subscription" without seeing what this means on certain models.

The way I'm reading this, is that cars like M550i or higher trims won't have to deal with it because most of this comes standard anyway. I think this will be more applicable for base trims. Instead of manufacturing a base model, BMW will just build all models with these features.

If you're one to buy base models of anything, this will benefit you because you weren't going to pay for the option or a package anyway and at least you can enjoy a feature for a few bucks one or twice instead of buying the option from factory and never using it.

I don't think this is meant to replace anything - BMW will still over premium packages that will give you the options but for everyone else, it sort of benefits them.
It will cost BMW extra to install the hardware for all these features on every car. Each "base model" they sell under this subscription model will be costing them hundreds if not thousands more than it did before. That means BMW will not only have to recoup these costs from us consumers but will be looking to make a profit too. They will probably have to raise prices as well as charging the subscriptions. This is a big deal.

Also it's easy to put $5000+ in options on an M550i that could all be put behind subscriptions. Driving Assistant Plus (adaptive cruise), head up display, heated steering wheel, ventilated seats, massage seats, heated rear seats, and Integral Active Steering (rear wheel steering) are all features they could lock you out of with software if they wanted to. If they were really evil they could even disable adaptive dampers or limit performance unless you subscribe.

Last edited by Coi; 07-11-2022 at 09:53 PM..
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      07-11-2022, 09:52 PM   #26
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Originally Posted by wtwo3 View Post
I see this as a positive.

For those of us who were going to buy these feature anyway, we can pay the lifetime fee and not have to worry about any additional monthly subscription costs.

For those of us who might use certain features at certain points of the year depending on seasonality or just access to the car.... then you subscribe temporarily and there's your savings to be had.

Obviously benefits on the used market as well for buyers who can now just buy a single model and not have to worry about which features were and weren't optioned.

I think the benefit to BMW in this whole scenario is that they can now attract a new market of people who might want to "try" a feature which they wouldn't normally have optioned when buying new. And then convert those trials into actual sales.
I've said it multiple times in this thread but for simple economic reasons this cannot be a positive. The fact that BMW will be installing the hardware for all this stuff on base models will cost them money. BMW putting adaptive cruise and heated everything in all their cars will be few hundred more per car. With a few more features this could be four figures. Not only will they look to recoup this money from consumers but they will want to make a big profit. That means making more from not just the subscribers but every BMW customer. If BMW's expenses are going up this simply can't result in savings BMW buyers/owners.

There are multiple issues for the used market too. Firstly, this will hurt resale values and trade-in values since we will know the next owner will have to re-purchase or re-subscribe for all of these features again. That loss in resale value for owners will be going straight into BMW's pockets. Secondly, BMW can disable everything on every used car that is sold through the dealer even if had be permanently paid for.

The pro-consumer move would be to slightly increase prices but greatly increase standard equipment. Toyota and Lexus did this when they made adaptive cruise control standard equipment a few years ago. (Not saying they're a perfect company though and they have their own subscription scandal right now.) Subscription models are the most anti-consumer way to go about this.

Last edited by Coi; 07-11-2022 at 10:06 PM..
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      07-11-2022, 09:56 PM   #27
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Originally Posted by Coi View Post
Personally I really don't like this direction for BMW and I would definitely not be purchasing a new one if they bring this pricing model in the US. BMW is supposed to be a luxury brand and charging owners for features already installed on their cars is beyond parsimonious. Not at all a premium ownership experience.

This really just seems like greed with no benefit to the customer. Having hardware for features fully installed on cars but blocked with software is wasteful. This subscription is simply just to have the features unblocked; if the hardware malfunctions off-warranty then the customer still has to pay for repairs as well as paying the subscription.

Putting safety features like auto high beams or adaptive cruise behind a subscription might even be dangerous. If a customer's subscription ends or they have an error with their payment they might not even immediately notice that these features are no longer available. Of course drivers should be aware that any safety feature could malfunction or stop working at any time, but manufacturers should not be going out of their way to increase the number of interruptions to the operation of these features.

There are also issues with subsequent owners, where BMW could say that unlimited subscriptions only apply to the owner that paid for it and don't stay with the car. If the car is bought from a dealership rather than a private sale the later owners would never even know if unlimited subscriptions had previously been on the car.

With electric vehicles on the horizon this gives manufactures even more options to limit basic functionality behind subscriptions like range or performance. Also if one manufacturer starts doing stuff like this it can cause a cascading effect through the industry. I would suggest that anyone with connections at BMW try to make sure they don't continue down this path.
This is already happening with Tesla. Quite a few complaints certain features being turned off by the mothership when the car shows up on their radar as being sold to a new owner forcing the new owner to pay again for said feature.
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      07-11-2022, 10:02 PM   #28
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Originally Posted by TheBingoBalls View Post
I agree. I don't think the customer really loses out on anything. BMW benefits because they potentially collect a sale of an option multiple times if the car gets on the used market (assuming the option gets removed if an owner gets rid of the car).
If bmw is disabling features when you sell your car and making the next owner pay for them again that will undeniably hurt resale values. Even though they're not providing anything of vale at that point in time, BMW will essentially be taking a cut of every used car sale. Owners will definitely be hurt by this in the form of increased depreciation.

Last edited by Coi; 07-11-2022 at 10:09 PM..
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      07-11-2022, 10:06 PM   #29
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Quote:
Originally Posted by Coi View Post
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Originally Posted by TheBingoBalls View Post
I agree. I don't think the customer really loses out on anything. BMW benefits because they potentially collect a sale of an option multiple times if the car gets on the used market (assuming the option gets removed if an owner gets rid of the car).
If bmw is disabling features when you sell your car and making the next owner pay for them again that will undeniably hurt resale values. Even though they're not providing anything of vale at that point in time, BMW will essentially be taking a cut of every used car sale. Owners will definitely be hurt by this in the form of increased depreciation.
I don't think much is going to change. Everyone will have to readjust on how they appraise used cars. If a car cost $50,000, depreciation/resale value will be based on that like it has been - no one should be appraising a car for what was enabled if BMW is going to disable features if a car is sold to a second owner.

Again, all of this is highly reliant on how BMW prices these "fully" loaded cars. The subscription part shouldn't be an issue.
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      07-11-2022, 10:20 PM   #30
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Originally Posted by TheBingoBalls View Post
I don't think much is going to change. Everyone will have to readjust on how they appraise used cars. If a car cost $50,000, depreciation/resale value will be based on that like it has been - no one should be appraising a car for what was enabled if BMW is going to disable features if a car is sold to a second owner.

Again, all of this is highly reliant on how BMW prices these "fully" loaded cars. The subscription part shouldn't be an issue.
A lot will change. The cost for BMW will go up since they will be paying to put cruise control radars, heating coils, and cameras in every car. They'll have to make more money to cover this cost as well as make a profit. The money to cover the increased manufacturing cost will have to come from consumers. This could mean hundreds if not thousands more per car. It's simply impossible for either prices or ownership cost to not go up under the subscription model.

Yeah, people will readjust how used cars are appraised in that values will go down. Right now my X3 M40i with a bunch of options is worth more on the used market because when the next owner gets it they know they'll have adaptive cruise, heated seats, heated steering wheel, auto parking, heads-up display, premium sound system etc. Under the subscription model not only would I have paid for those features but my trade-in or resale value will be the same as a base model car with no options whatsoever. BMW is making more money by charging the next owner to unlock stuff already on the car and I'd be loosing out.

A loaded car that should be worth $50k with all the features enabled will now be priced as $45k base-model used car. Lower resale will also hurt lease residuals. That's money straight out of the pockets of people buying new BMWs and into the pockets of BMW corporate.
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      07-11-2022, 10:31 PM   #31
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Quote:
Originally Posted by Coi View Post
It will cost BMW extra to install the hardware for all these features on every car. Each "base model" they sell under this subscription model will be costing them hundreds if not thousands more than it did before. That means BMW will not only have to recoup these costs from us consumers but will be looking to make a profit too. They will probably have to raise prices as well as charging the subscriptions. This is a big deal.

Also it's easy to put $5000+ in options on an M550i that could all be put behind subscriptions. Driving Assistant Plus (adaptive cruise), head up display, heated steering wheel, ventilated seats, massage seats, heated rear seats, and Integral Active Steering (rear wheel steering) are all features they could lock you out of with software if they wanted to. If they were really evil they could even disable adaptive dampers or limit performance unless you subscribe.
I actually wouldn't be surprised if it's actually cheaper for bmw to just install all options on every car. The optimization to their supply chain would be immense and potentially offset the added cost of extra equipment. There's multiple avenues for cost mitigation when you maximize your sourcing. Volume based discounting, transportation optimization, inventory optimization, smoother demand/supply planning, etc. You're streamlining a process which typically puts a huge damper to your supply chain and overall manufacturing. Forecasting also becomes much easier using this model.

As an example to how much of an impact supply chain efficiency has on cost - An individual paint, which might be offered for free on one model, can easily cost someone $5,000 on a model it's not typically offered on. Why? It's not because the paint is more expensive than other paints. It's because of the disruption to the supply chain. You as a customer are paying BMW $5,000 because of the disruption you're causing to their supply chain by ordering a non-standardized color for your model.
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      07-11-2022, 10:47 PM   #32
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Just wait until they start charging a monthly fee for performance.

Nice M5 Competition. Oh, you want more than 100 hp? That'll be $500 per extra 200 hp.
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      07-11-2022, 11:19 PM   #33
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Originally Posted by wtwo3 View Post
I actually wouldn't be surprised if it's actually cheaper for bmw to just install all options on every car. The optimization to their supply chain would be immense and potentially offset the added cost of extra equipment. There's multiple avenues for cost mitigation when you maximize your sourcing. Volume based discounting, transportation optimization, inventory optimization, smoother demand/supply planning, etc. You're streamlining a process which typically puts a huge damper to your supply chain and overall manufacturing. Forecasting also becomes much easier using this model.

As an example to how much of an impact supply chain efficiency has on cost - An individual paint, which might be offered for free on one model, can easily cost someone $5,000 on a model it's not typically offered on. Why? It's not because the paint is more expensive than other paints. It's because of the disruption to the supply chain. You as a customer are paying BMW $5,000 because of the disruption you're causing to their supply chain by ordering a non-standardized color for your model.
If it was cheaper for them to have every feature on every car they would already be doing it. Even if that came with a small increase in base price they would still do it if they could. Pretty much all Audis have standard heated seats and Lexus has standard adaptive cruise control, so BMW is already loosing out by not having that stuff standard. There's no reason they would be leaving both money and a competitive advantage on the table if that was the case.

The only time it's cheaper to include an option than not include it is if the number of cars not getting it is extremely small. Like this was the case for heated seats on the "base" $35k Model 3 a few years ago because they made it pretty much impossible to actually buy one even if you wanted it to so production of that spec was miniscule. (It was mostly made to meet a specific Canadian regulation around tax credits, but I digress.) This does not apply with options where the ratio of cars with and without the option are more reasonable.

The more parts BMWs needs the more they have to pay for shipping, storing, and time for installing those parts. Sure, economics of scale apply but that doesn't mean that overall buying more of something costs less than buying fewer. The total parts cost up until the point of installation is larger with more standard equipment.

Also stuff like adaptive cruise control radars are expensive and often come from suppliers like Delphi or Bosch. So the car manufacturer isn't just paying the raw cost of building these parts but is covering the logistics and profit margin of a supplier too.

Individual paint is actually a special case, and you're paying for more than just the disruption to the assembly line. I remember hearing about paint-to-sample with Porsche where they actually have to test the paint on every material it will be going on (steel for chassis, aluminum for body panels, and plastic for bumpers) to make sure the color matches on all of those. They they have to do durability testing for that specific paint on all those materials. This is extremely labor and time intensive. If you're picking a color under BMW individual that isn't normally offered on that model then the material composition of the exterior metals or plastics might be different, potentially requiring testing. Also the labor involved for painting one car on an entire assembly line a different color than all the others is obviously vastly more than simply installing or not installing heated seats or radar cruise.

I would also guess that a huge proportion of the cost for individual color is profit because they know people who want it are willing to pay that much. Even if individual color didn't cost BMW anything they would still charge $5k for it because they can.

Last edited by Coi; 07-11-2022 at 11:28 PM..
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      07-11-2022, 11:45 PM   #34
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Quote:
Originally Posted by Coi View Post
If it was cheaper for them to have every feature on every car they would already be doing it. Even if that came with a small increase in base price they would still do it if they could. Pretty much all Audis have standard heated seats and Lexus has standard adaptive cruise control, so BMW is already loosing out by not having that stuff standard. There's no reason they would be leaving both money and a competitive advantage on the table if that was the case.

The only time it's cheaper to include an option than not include it is if the number of cars not getting it is extremely small. Like this was the case for heated seats on the "base" $35k Model 3 a few years ago because they made it pretty much impossible to actually buy one even if you wanted it to so production of that spec was miniscule. (It was mostly made to meet a specific Canadian regulation around tax credits, but I digress.) This does not apply with options where the ratio of cars with and without the option are more reasonable.

The more parts BMWs needs the more they have to pay for shipping, storing, and time for installing those parts. Sure, economics of scale apply but that doesn't mean that overall buying more of something costs less than buying fewer. The total parts cost up until the point of installation is larger with more standard equipment.

Also stuff like adaptive cruise control radars are expensive and often come from suppliers like Delphi or Bosch. So the car manufacturer isn't just paying the raw cost of building these parts but is covering the logistics and profit margin of a supplier too.

Individual paint is actually a special case, and you're paying for more than just the disruption to the assembly line. I remember hearing about paint-to-sample with Porsche where they actually have to test the paint on every material it will be going on (steel for chassis, aluminum for body panels, and plastic for bumpers) to make sure the color matches on all of those. They they have to do durability testing for that specific paint on all those materials. This is extremely labor and time intensive. If you're picking a color under BMW individual that isn't normally offered on that model then the material composition of the exterior metals or plastics might be different, potentially requiring testing. Also the labor involved for painting one car on an entire assembly line a different color than all the others is obviously vastly more than simply installing or not installing heated seats or radar cruise.

I would also guess that a huge proportion of the cost for individual color is profit because they know people who want it are willing to pay that much. Even if individual color didn't cost BMW anything they would still charge $5k for it because they can.
"If it was cheaper for them they'd already be doing it" isn't a valid argument... that's not how companies work. You invest in studies designed to uncover potential opportunities and it then goes through a process of validation for approval. If everything that was cheapest was already being done there would be no room for efficiency gains at any company. You're basically saying BMW is already operating at max efficiency and has no room for improvement.

I'm not saying it IS cheaper, I'm saying I wouldn't be surprised if it is. Truthfully we don't have insider information on their sourcing, transportation and distribution costs, but you can bet they've conducted the break-even analysis for this proposal. I've worked in various manufacturing industries over my career and currently lead a department dedicated to supply chain optimization, so I have an idea of how much of an impact logistics and supply chain efficiencies have on overall COGS.

Quote:
The more parts BMWs needs the more they have to pay for shipping, storing, and time for installing those parts. Sure, economics of scale apply but that doesn't mean that overall buying more of something costs less than buying fewer. The total parts cost up until the point of installation is larger with more standard equipment.
Absolutely it can be cheaper. If you're now shipping FTL as opposed to say, LTL or parcel due to maximized volumes tied to your main product line, there's a certain break-even point where shipping efficiencies begin to favor higher volume, regular ordering. I worked at a large manufacturing and distribution company where we conducted a study showing exactly that. That by maximizing truckloads we could actually reduce our logistics costs while simultaneously shipping more product. Think of it this way - by standardizing your ordering process and maximizing truckloads, you're sending less but fuller trucks as opposed to frequent, less than truckloads. This also ties into your forecasting - if you have greater forecast accuracy because your ancillary products are tied to your main product, it benefits your logistics costs as well as inventory costs.

As for individual colors - yes I agree there's many components that go into pricing for it - perhaps even profit. But I wouldn't be surprised if disruption to supply chain is the #1 cost associated with it. If BMW was actually making a healthy profit on individual colors, they'd advertise them much more openly. Outside of this forum, few people even know what an individual color is, and most don't even know you can special order a car. Majority of people still assume your only method of purchasing is off the lot and your color selection is what has been ordered by the dealer for inventory (obviously there's some change happening in the current climate).
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      07-12-2022, 12:56 AM   #35
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Just wait until they start charging a monthly fee for performance.

Nice M5 Competition. Oh, you want more than 100 hp? That'll be $500 per extra 200 hp.
Don't wait, just go for it: don't they offer some "driver's package" (it's not worth it looking it up for me) that adds some power(?)/speed for "M"s already?

It should be amazing when they make the braking "feature" (the basic one, besides that cruise control already mentioned) a monthly subscription. Coming to yourself after an accident: "I must have missed the payment!".

Heated seats subscription must cost attractively compared to warm pants/underwear!
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      07-12-2022, 01:35 AM   #36
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Don't wait, just go for it: don't they offer some "driver's package" (it's not worth it looking it up for me) that adds some power(?)/speed for "M"s already?

It should be amazing when they make the braking "feature" (the basic one, besides that cruise control already mentioned) a monthly subscription. Coming to yourself after an accident: "I must have missed the payment!".

Heated seats subscription must cost attractively compared to warm pants/underwear!
Yep, it's the M drivers package and it raises the top speed of vehicles (~30 MPH for M3) and a day at a performance driving center. The top speed is purely a software flag that could be changed by the end user, and a day at the track ain't worth $2,500.

I can't imagine the backlash if they brought this to the U.S and people start getting nickle and dimed for every little feature.
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      07-12-2022, 02:29 AM   #37
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I don't understand who has the reigns at BMW where they think they can maintain their prestige while simultaneously transitioning to the Spirit Airlines pricing model.

Utterly terrible move by them. I don't think they understand that even piloting a program like this in S.Korea will hurt their reputation globally. I'm not paying $20/month to have heated seats that are already installed on the vehicle. Are you kidding me?
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      07-12-2022, 02:39 AM   #38
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A lot will change. The cost for BMW will go up since they will be paying to put cruise control radars, heating coils, and cameras in every car. They'll have to make more money to cover this cost as well as make a profit. The money to cover the increased manufacturing cost will have to come from consumers. This could mean hundreds if not thousands more per car. It's simply impossible for either prices or ownership cost to not go up under the subscription model.

Yeah, people will readjust how used cars are appraised in that values will go down. Right now my X3 M40i with a bunch of options is worth more on the used market because when the next owner gets it they know they'll have adaptive cruise, heated seats, heated steering wheel, auto parking, heads-up display, premium sound system etc. Under the subscription model not only would I have paid for those features but my trade-in or resale value will be the same as a base model car with no options whatsoever. BMW is making more money by charging the next owner to unlock stuff already on the car and I'd be loosing out.

A loaded car that should be worth $50k with all the features enabled will now be priced as $45k base-model used car. Lower resale will also hurt lease residuals. That's money straight out of the pockets of people buying new BMWs and into the pockets of BMW corporate.
you're kidding yourself on how much these things cost

barely optioned toyotas and hondas already all come with these things standard. in 2019 i traded my daily driver, a 3 series, for a camry because for $28k i could get heated seats, radar cruise control, carplay, panoramic sunroof. whereas on a 3 series they nickel and dimed you to death to get any of the interesting features

there was a time that the premium brands gave you standard features you couldn't even get on an economy car. bizarrely, it's now the other way around with honda civics coming with more standard tech than a bmw twice the price. while the 3 series was objectively a better car than the camry i bought, there was not enough value add for me to justify literally double the price

it's even worse today. i needed an suv. for under $50k i got a highlander platinum with awd, radar cruise, lane centering, third row seating, heated/ventilated seats, hud, panoramic roof, heated second row, power tailgate, sun shades in the rear doors. it's crazy how hard it is to spec out a bmw with some of that
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      07-12-2022, 02:43 AM   #39
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"If it was cheaper for them they'd already be doing it" isn't a valid argument... that's not how companies work. You invest in studies designed to uncover potential opportunities and it then goes through a process of validation for approval. If everything that was cheapest was already being done there would be no room for efficiency gains at any company. You're basically saying BMW is already operating at max efficiency and has no room for improvement.

I'm not saying it IS cheaper, I'm saying I wouldn't be surprised if it is. Truthfully we don't have insider information on their sourcing, transportation and distribution costs, but you can bet they've conducted the break-even analysis for this proposal. I've worked in various manufacturing industries over my career and currently lead a department dedicated to supply chain optimization, so I have an idea of how much of an impact logistics and supply chain efficiencies have on overall COGS.
You seriously wouldn't be surprised if a car company could make every single car fully loaded and have it cost them less money? Surely if this was the case one of them would have discovered this secret to success excepting a subscription model.

Looking at examples, for the last few years Porsche has the highest margins of any major automotive brand with the most customizability and no trim levels. Every model has literally millions of possible configurations. They make most of their profit from SUVs that are only slightly more expensive than those from other German luxury brands. If shipping, logistics, and supply chain mattered more than material and parts costs then they should be loosing tons of money. Clearly that's not the case. Maybe Porsche also saves money by not installing costly equipment on every vehicle. I personally dislike their pricing model too, but it clearly works.

Genesis has only a few trim levels and almost no a la carte options on any of their models. Being part of Hyundai, they're also extremely vertically and horizontally integrated even doing their own shipping and in some cases their own raw materials. Their pricing is nearly in line with Audi and BMW now and even with new cars currently having barely any manufacturer incentives Genesis is barely turning a profit. We don't need insider to data to see that there's more to profitability in the automotive industry than sourcing, transportation, distribution, and production line simplicity.

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Absolutely it can be cheaper. If you're now shipping FTL as opposed to say, LTL or parcel due to maximized volumes tied to your main product line, there's a certain break-even point where shipping efficiencies begin to favor higher volume, regular ordering. I worked at a large manufacturing and distribution company where we conducted a study showing exactly that. That by maximizing truckloads we could actually reduce our logistics costs while simultaneously shipping more product. Think of it this way - by standardizing your ordering process and maximizing truckloads, you're sending less but fuller trucks as opposed to frequent, less than truckloads. This also ties into your forecasting - if you have greater forecast accuracy because your ancillary products are tied to your main product, it benefits your logistics costs as well as inventory costs.
BMW made 433,810 vehicles in 2021. They're already operating at a scale where things like LTL and parcel are not even considered. Nearly every part they make is produced in the tens of thousands, hundreds of thousands, or even millions. The following numbers are examples, but if they go from ordering 100,000 adaptive cruise radars to 400,000 adaptive cruise radars they're not going to suddenly see a dramatic decrease in cost simply from volume. Increases in efficiency for a company of that size that come from improvements in engineering, technology, and logistics rather than scale.

A basic principle of an economies of scale graph is that it doesn't just keep going down forever. Eventually you reach constant returns where the price levels out. After that it's diseconomies of scale where supply is overwhelmed and the cost per unit starts to go up again. This is true for everything. We've seen countless times in the last couple years that big supply chains can clearly get overwhelmed at which point it makes sense to cut features and reprioritize. There's no way every single part BMW manufacturers or orders is still in economies of scale in terms of manufacturing and installation.

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As for individual colors - yes I agree there's many components that go into pricing for it - perhaps even profit. But I wouldn't be surprised if disruption to supply chain is the #1 cost associated with it. If BMW was actually making a healthy profit on individual colors, they'd advertise them much more openly. Outside of this forum, few people even know what an individual color is, and most don't even know you can special order a car. Majority of people still assume your only method of purchasing is off the lot and your color selection is what has been ordered by the dealer for inventory (obviously there's some change happening in the current climate).
You also have to consider that outside of enthusiasts the idea of paying $5000 for a different color car is insane. I am personally quite willing to compromise on color so I don't really get it either. Even if individual colors are hugely profitable it doesn't make sense for them to spend money advertising something that barely anyone is going to get. Also my local dealership has a huge wall display for BMW individual so it's not that much of a secret.

I really don't see how it could be justified that BMW equipping cars with every feature then blocking them behind a subscription could possibly reduce prices for consumers. I also can't think of any industry at all where the most profitable company only sells a single variant of their product, so for that to be true for something as complex and expensive as cars seems farfetched. This is clearly a cash grab and not some amazing achievement in efficiency that no other automaker in the history of mass production has ever thought of. I think this unbecoming and anti-consumer behavior from a so-called luxury brand should be called out, not defended.

On a side note, I really don't want to come across as rude or anything because I'm enjoying this discussion! You bring up a lot of points I didn't fully consider.

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      07-12-2022, 02:59 AM   #40
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Another reason to hang on to my older cars.
Absolutely!
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      07-12-2022, 03:01 AM   #41
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It's not a pay per view TV episode! You buy it, you own it, it's yours! If you see the model they offer, there is options to buy, then that's ok. If the ONLY option is subscription, then sorry, but NO! Lease users may want this though because then they are only paying during their usage term, and that kind of makes sense. But really, they already make enough $$$ of the manufacture of the vehicle, why the nickel & dime stuff!? It takes away from the brand! Sorry!

Yeah! Madness
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      07-12-2022, 03:12 AM   #42
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      07-12-2022, 03:21 AM   #43
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.
But is true...

https://www.bmwblog.com/2022/07/11/b...-subscription/
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      07-12-2022, 06:29 AM   #44
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A really dumb idea that only serves to hurt the brand image.
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