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Car subscription services: A slow, expensive start — but the potential is huge

Americans are used to paying for subscriptions — to magazines and cable television, for instance — but experience shows they'll cancel when the price of admission gets too high, or there are more tempting alternatives. Cord cutters ditched nearly 1.5 million pay-TV subscriptions in 2017, according to a survey by Leichtman Research Group. Cable TV started out cheap with basic offerings, and then got expensive. The auto industry's subscription offerings are new, but they're starting out costly, and not price-competitive with traditional leasing. The upside is that they take the hassle out of car ownership for busy people by letting the service take care of maintenance, insurance, licensing and taxes. And they give consumers choice, often allowing relatively painless switches between different cars in the automakers' lineup. Subscription services also point the way toward an ownership-free auto experience, and offer an easy transition to a potential world where ride- and car-sharing will be dominant. Subscriptions are here to stay, but consumers may take a while to "get" them. Lincoln's subscription service for lightly used 2015 to 2017 models, offered through the Ford-owned Canvas beginning this year, got off to a slow start. Many early subscribers canceled. Last month, Cadillac announced it would " temporarily pause" its $1,800-per-month Book subscription service for "adjustments" as of December 1. According to the Wall Street Journal, "Snags with the back-end technology used to support the service made some customer-service functions tedious and time-consuming, adding costs for the company." The challenge for automakers is to come up with a strategy that offers consumers a compelling, affordable option to regular ownership, and one that can also make a profit. I think they'll find that sweet spot, but they're not there yet. Jack Nerad, former executive editorial director at Kelley Blue Book and author of " The Complete Idiot's Guide to Buying or Leasing a Car," points out that "A lot of people expected that subscriptions would be very valuable for people who wanted inexpensive transportation, but the reality is quite the opposite. Subscriptions are offering more choices for the wealthy.

Daimler buying 12% stake in Beijing Auto

Daimler and Beijing Automotive are officially going steady, with the German company set to take a 12-percent stake in the Chinese brand tomorrow. The two are already tied up in a Mercedes engine plant in Beijing, of which BAIC will increase its stake in, from 50 to 51 percent. Daimler will also get two seats on the Chinese company's board. BAIC may also gain the ability to produce cars on Mercedes-Benz platforms, according to Automotive News Europe.
The investment in BAIC comes ahead of that company's initial public offering, according to a report form Bloomberg, which indicates the deal will be inked tomorrow in the Chinese capital. According to the report, if the circumstances are right, BAIC may turn around and invest in the Germany company "soon."
It's not entirely clear just how much the 12-percent cut is costing Daimler, although it seems reasonable to assume that, as it's ahead of the IPO, the parent company of Mercedes is getting a bit of a bargain.

Apple lends prestige to a new Mercedes-Benz music system

Not often does Apple offer its name to products or technologies that emerge from beyond the walls of Fortress Cupertino. Could a partnership with Mercedes-Benz signal the start of something new? Mercedes’ new audio system unveiled this past weekend centers on the integration of Apple MusicÂ’s Spatial Audio with Dolby Atmos surround — a music enhancement generally heard in headphone-listening environments — in selected (and optional) Burmester audio systems. Plans are to offer the components initially in the Mercedes-Maybach S-Class, the S-Class as well as the EQE, EQE SUV, EQS and EQS SUV. No prices for the options were announced. Also partnering in the project is the Universal Music Group, one of the worldÂ’s leading music publishers. According to Mercedes, the Dolby tech “empowers musicians and audio engineers to place discrete audio elements or objects in a three-dimensional sound field, which goes beyond the capabilities of standard stereo productions. The system adapts to any playback environment, meaning fans can listen to music with unparalleled clarity that matches the artist's original vision in the studio.” We would expect no less from 31 speakers in a Maybach, powered by a pair of amps churning out 1,750 watts. Imagine Keith Richards cranking guitar through 31 speakers in an enclosed car cockpit. Almost three out of four music consumers say that they listen mostly in a car, says Mercedes Chairman Ola Kallenius. ”Through this exceptional partnership, we are giving our customers the extraordinary in-car audio experience they expect from Mercedes-Benz,” he said. “Both Apple and UMG share our vision and values and, together with Dolby, we will create a seamless and unique experience for our customers." Partnerships between automakers and audio companies have become common in recent years, and there have been mixed results from systems attempting to create a "surround sound" experience that goes beyond stereo. Bose put its systems into General Motors cars decades ago, and others followed, including Bowers & Wilkins, JBL and even the legendary McIntosh. Most recently, famed Italian speaker designer Sonon faber found a home in Maserati's new Grecale, and British speaker maker KEF is working with Lotus.