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New Jersey legislators aim to ban most in-car subscriptions

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Re: New Jersey legislators aim to ban most in-car subscriptions

#21

Post by sokoloff »

bryanlarsen wrote: post #17
sublinear wrote: post #8

Earlier quoted context omitted.

Nope. The cost of the hardware is always necessarily still passed on to the customer before they even pay for the subscription to "unlock" it. It's double dipping. It makes no sense to gamble that upsells will be successful in exchange for a more competitive price. There's guaranteed loss with that idea. The components pre-installed must cost something and it's not possible for the manufacturer to get that money back…

> The cost of the hardware is always necessarily still passed on to the customer before they even pay for the subscription to "unlock" it. That's not true. Razors are the canonical example of a product sold below cost, there are many others. > The components pre-installed must cost something They must cost something, but there's also a significant cost to creating multiple SKU's, and that cost is likely more than the…

On my Jeep Grand Cherokee, without checking I wagered the wiring harness would be the same across the models without heated seats (mine) and with (the junkyard leather seat package I bought). I was surprised to learn I was wrong.

Re: New Jersey legislators aim to ban most in-car subscriptions

#22

Post by jaywalk »

Hamuko wrote: post #6
kylehotchkiss wrote: post #2

Go New Jersey! Now get Texas and California on board so car companies don't bother offering these in the country at all

Aren't they suing California now for having "too strict" of emissions regulations because California's position in the marketplace makes it so that their rules become de facto law of the land? If that goes through, I'm not really sure if California can do really any automotive regulation that other states won't like.

At least with something like this, it would be relatively simple for the manufacturers to just enable the functionality based on where the car is sold.

Can't do anything like that with emissions regulations.

Re: New Jersey legislators aim to ban most in-car subscriptions

#23

Post by sokoloff »

raverbashing wrote: post #13
pxx wrote: post #3

I don't get it. People seem to think that if you ban this practice, you'll get the premium package for free. That's not going to be the case. Currently, you can pay for heated seats all up-front or via a monthly subscription. This proposed legislation prevents you from paying for it via a monthly subscription. So automakers will stop allowing you to do that. All you've done is limit customer choices.

> prevents you from paying for it via a monthly subscription And why in tarnation would I pay monthly for something that has a fixed cost to the manufacturer?

I would happily pay $10/mo for 5 months a year for the 4 years I expected to own the car rather than $250-500 to buy heated seats.

I don’t care about someone else’s costs; I care about the value I get and the price I’m asked to pay. If someone else makes a profit because they structure the deal smartly, good for them.

Re: New Jersey legislators aim to ban most in-car subscriptions

#24

Post by nequo »

pxx wrote: post #3

I don't get it. People seem to think that if you ban this practice, you'll get the premium package for free. That's not going to be the case. Currently, you can pay for heated seats all up-front or via a monthly subscription. This proposed legislation prevents you from paying for it via a monthly subscription. So automakers will stop allowing you to do that. All you've done is limit customer choices.

Subscription services are a technology for carmakers to practice price discrimination.[1] Price discrimination reallocates consumer surplus to carmakers. It is not good for you unless you're a carmaker.

Without subscription services, they only have the option of limiting heated seats to certain trims. If you want heated seats, you can buy one of those trims. But that trim probably comes with other features, too, that contribute to your surplus as a consumer.

With subscription services, they can force you to pay for everything feature-by-feature. This is worse for you, better for them.

[1] https://en.wikipedia.org/wiki/Price_discrimination

Re: New Jersey legislators aim to ban most in-car subscriptions

#26

Post by zeroonetwothree »

neogodless wrote: post #10

> if an automaker or other associated party can prove that it costs money to maintain the feature and/or service in question, then it'd be legally allowed. This would include services like OnStar and such. While I don't disagree with the exception here, I think they should outlaw mandatory subscriptions... like OnStar, which GM has started to add to most of their cars. It's not in the MSRP, but it's a required cost a…

No one is forcing you to buy that car mode. Many cars don’t have mandatory subscriptions.

Re: New Jersey legislators aim to ban most in-car subscriptions

#27

Post by giantg2 »

Hamuko wrote: post #6
kylehotchkiss wrote: post #2

Go New Jersey! Now get Texas and California on board so car companies don't bother offering these in the country at all

Aren't they suing California now for having "too strict" of emissions regulations because California's position in the marketplace makes it so that their rules become de facto law of the land? If that goes through, I'm not really sure if California can do really any automotive regulation that other states won't like.

If they can sue someone over growing their own wheat, they can sue over just about anything with even a tenuous link to commercial activity.

Re: New Jersey legislators aim to ban most in-car subscriptions

#28

Post by zeroonetwothree »

nequo wrote: post #24
pxx wrote: post #3

I don't get it. People seem to think that if you ban this practice, you'll get the premium package for free. That's not going to be the case. Currently, you can pay for heated seats all up-front or via a monthly subscription. This proposed legislation prevents you from paying for it via a monthly subscription. So automakers will stop allowing you to do that. All you've done is limit customer choices.

Subscription services are a technology for carmakers to practice price discrimination.[1] Price discrimination reallocates consumer surplus to carmakers. It is not good for you unless you're a carmaker. Without subscription services, they only have the option of limiting heated seats to certain trims. If you want heated seats, you can buy one of those trims. But that trim probably comes with other features, too, that…

This is false. Price discrimination is good for consumers that opt out. In the absence of price discrimination the price ends up somewhere in between, which is worse for customers that would have paid less.

Re: New Jersey legislators aim to ban most in-car subscriptions

#29

Post by dawnerd »

solomatov wrote: post #20

"Costing money to maintain feature" is a great criteria for legal subscriptions. Could it be applied more broadly than in the car industry?

Mainly targeting subscriptions to enable seat warmers for example. That's something becoming more common that has zero cost to the manufacturer past vehicle delivery.

Re: New Jersey legislators aim to ban most in-car subscriptions

#30

Post by zeroonetwothree »

ianferrel wrote: post #5
pxx wrote: post #3

I don't get it. People seem to think that if you ban this practice, you'll get the premium package for free. That's not going to be the case. Currently, you can pay for heated seats all up-front or via a monthly subscription. This proposed legislation prevents you from paying for it via a monthly subscription. So automakers will stop allowing you to do that. All you've done is limit customer choices.

Price discrimination often allows producers to capture more of the surplus for complicated reasons that mostly boil down to the fact that they are the party with more information. A limit on complicated pricing models likely results in some deadweight loss, but may result in higher aggregate consumer surplus. Choice isn't everything.

Price discrimination works fine without subscriptions. They can charge $1000 for heated seats one time rather than monthly. This is entirely orthogonal.
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