Volkswagen Explores Customer Interest In Subscription Model

Volkswagen wants to gauge customer interest in pay-per-mile billing and on-demand charges for optional car functions through a pilot subscription service due for unveiling this year.

That’s according to the website Autocar, which reports that the German carmaker intends to test a subscription model on its ID 3 electric hatchback, part of a larger plan to explore new revenue sources made possible by electric cars with perpetual internet connections.

Volkswagen has prioritized developing of “data-driven” eCommerce business models as it looks for new revenue streams enabled by the new generation of internet-connected electric cars, per the report.

The company says it thinks these services could generate revenues “in the three-million digit” euro range by 2025. The subscription service will launch in six German cities. Volkswagen will also test pay-per-mile billing and charges for on-demand features, saying that could include “a charging flat rate or navigation services that can be booked as needed.”

Klaus Zellmer, head of sales for Volkswagen, told Autocar the company can also use data about customers’ driving profiles to offer them various services.

“We make offers to customers who then come to us. For example, you have a customer with a battery-powered vehicle, and if we notice he does long journeys, we can provide him with additional range, which we can do digitally,” Zellmer said.

Car subscriptions have had a rough journey so far, with both Audi and BMW attempting and scrapping their programs in recent years.

But in a conversation with PYMNTS last month, Sticky.io CEO Brian Bogosian said the concept can work when done correctly.

He pointed to the example of Volvo, which Bogosian said succeeded by “providing compelling value to the customer.

“I think people will see significant uptake for car subscriptions, and I think some brands will be very successful with this kind of model,” Bogosian predicted.

“For a mass-market car that addresses a big part of the total market opportunity, I think there will be a tremendous opportunity for a subscription term of three to five years, offering subscriptions at different price points. I think it comes down to what you’re providing to consumers, and whether it’s compelling or not.”