When Ron and Lisa Doyle bought their 2013 Toyota Prius V Five, a built-in garage door opener and heated seats weren't the only standard features.
The hybrid wagon came with loads of entertainment and information freebies, including a 90-day trial of Sirius/XM satellite radio and access to Toyota Entune, which is a collection of on-screen apps for directions, traffic, weather, gas prices and more. The five-passenger 2013 Toyota Prius V Five has a $32,000 price tag that also included a free smartphone app for Toyota's ToyotaCare maintenance and roadside assistance service.
Buy almost any new car today and, as the Doyles discovered, you'll receive a handful of connected car services at no charge. Automakers offer interactive infotainment and telematics-based services free for a limited time to get your business — and it works.
"The onboard GPS and the familiar co-branded apps dazzled us at the dealership and definitely had a small effect on our final decision," says Ron Doyle, a Denver Web developer and father of two.
When the free trials run out, however, subscriptions can run upward of $10 a month for each service, costs that can add substantially to the price of maintaining a vehicle.
By playing it smart, you can save money on connected car services in a new vehicle and in some used cars. In some instances, it's possible to negotiate lower-than-advertised prices once free trials run out. In others, you may be able to bypass what automakers and their partners offer for a cheaper, car-friendly smartphone app from an outside party that performs the same functions.
The Forward March of Connected Car Services
"Connected car services" is a catch-all term that describes infotainment features such as satellite radio, weather and GPS that show up on a vehicle's in-dash display; some of them may be apps running off a smartphone plugged into the vehicle. The term also describes telematics services that run off other built-in two-way communications systems to provide roadside assistance, vehicle diagnostics and other types of help.
Connected car services of all kinds have become standard on many new cars and trucks. At Ford, for example, 90 percent of 2013 model cars and trucks included some type of connected car subscription, according to Michelle Moody, Ford's cross vehicle marketing manager.
By 2016, the number of new cars with some type of factory-installed safety and security telematics is expected to reach 50.8 million worldwide, up from 11.5 million in 2013, a combined annual growth rate of 34.5 percent, according to ABI Research, a tech industry analyst.
It's not just new vehicles that come with connected car services and subscriptions. Auto dealers now offer limited-time free trials of satellite radio and other services as incentives for shoppers to buy a used car or truck or to bring a vehicle in for an oil change or tune-up.
As automakers continue rolling out new connected car services, the costs of subscriptions could add up once the free trials end. Still, drivers are willing to spend $10-$20 a month for all the infotainment and telematics services they use, says Thilo Koslowski, an auto analyst at technology researcher Gartner, Inc. The amount hasn't changed over the past few years Gartner has tracked the data, Koslowski says.
How To Save
How can you take advantage of connected car services without putting a dent in your monthly car budget? To maximize the benefits while minimizing the expense, here are some things to consider.
Educate yourself. Free trials of connected car subscriptions differ by automaker, model and year. For example, a free trial for BMW's BMW Assist service lasts 10 years for 2014 model-year cars. Hyundai's Blue Link goes for three years and Mercedes-Benz's mbrace lasts six months, according to Strategy Analytics, the auto industry researcher. Read up on any new car or truck you're interested in buying to see what's available before you shop. Many automakers create special Web sites for their connected car services. A few include:
- BMW Assist
- Chrysler UConnect
- Ford Sync/Sync with MyFord Touch
- GM OnStar
- Hyundai Blue Link
- Infiniti Connection
- Lexus Enform
- Mercedes-Benz mbrace
Keep connected car costs in mind when negotiating with the dealer. Automakers are the ones that set terms for connected car subscriptions, which doesn't leave room for negotiating with the dealer over subscription prices once a free trial ends. One way to account for the expense of subscriptions you'll want once free trials run out is to calculate what the cost would be for the length of time you plan to own the car and then use that amount to negotiate a lower purchase or lease price for the car from the dealer, Koslowski says.
Use existing smartphone apps. Some vehicles' infotainment systems connect to your smartphone via Bluetooth so you can use apps you already own instead of paying for car-based subscriptions.
"We have a strategy where we acknowledge the customer is already paying for a lot of great information content on their phone and we want to leverage that. We feel it's an efficient way to enable experiences in the car," says Moody, the Ford executive.
Automakers are struggling to find the "killer apps" that drivers will pay for, says Roger Lanctot, associate director of Strategy Analytics' global automotive practice. "This is the challenge that embedded systems have. A lot of these premium functions are available as apps on smartphones," Lanctot says.
Wait until a free trial ends, then bargain. Doyle, the Denver Prius owner, enjoys listening to Sirius/XM satellite radio, but not enough to pay the $9.99 monthly fee for a regular subscription. When the three-month free trial expires, he plans to negotiate for a below-advertised discount, something he says some of his friends have done successfully. According to Sirius, the company offers discounts if listeners sign an annual or two-year contract, or upgrade to its All Access premium package that includes additional channels and Internet radio. Families can get discounts when they sign up for more than one subscription. In 2013, 44 percent of the people who bought or leased a new vehicle with Sirius paid for a subscription after the free trial ran out, according to the company.
Wait for next year's model. If the infotainment or telematics services you really want aren't available yet in the car you want to buy, you could put off replacing an existing car until the services arrive. Koslowski, for example, loves the new Chevrolet Corvette Stingray, but is holding off buying one until summer 2014, when General Motors is expected to introduce a model with 4G LTE, the high-speed wireless communications connection, which allows the fastest speeds for sending digital data. "I won't purchase a car until it has LTE," he says.
Buy or lease a new car when free trials run out. If you buy a new car every few years anyway, knowing when a free trial expires could help you time when you sell or trade in your present vehicle for a new one. Some automakers' roadside assistance plans, whether phone- or telematics-based, last as long as the manufacturer's warranty period. Some last longer, such as the roadside assistance plans from Cadillac and Mercedes-Benz.
Some telematics systems' free trials are multiyear, such as those from BMW and Hyundai. Follow this approach and with some cars, you might never have to pay for telematics-based services.
Shop at dealers that offer connected car discounts on pre-owned vehicles. Some auto dealers that participate in manufacturers' certified pre-owned vehicle programs offer free trials of connected car services to used-car buyers. Approximately 10,000 U.S. used-car dealers offer three-month free subscriptions of Sirius/XM satellite radio, according to the company. Buy a used Mercedes through an authorized Mercedes-Benz dealer and you can get three free months of mbrace/mbrace plus packages, including safety and security and travel assistance features.
Check if your insurance carrier offers a connected car bundle. Some insurance carriers offer discounts on connected car services when you buy or renew an auto insurance policy. State Farm offers a Drive Safe & Save with In-Drive Connect policy as a joint venture with Verizon Wireless. The policy covers mileage-based insurance along with stolen-vehicle assistance and hands-free mobile phone service, and includes a small monitor that plugs into a car's diagnostics port. After a one-year free trial, charges for In-Drive Connect increase to $6.99 a month or more based on what other features you choose.
Get a free subscription in exchange for an oil change or brake work. Since summer 2013, Sirius/XM has offered two-month free trials to drivers who bring vehicles in for servicing at participating dealers or repair shops, including cars or trucks with previously expired subscriptions.
The Future of Connected Car Costs
By 2016, auto industry analysts expect connected car services to be one of five top criteria people use to decide which vehicle to buy or lease.
Getting people to pay anything more than they already do for the services will be a different story.
"There isn't a whole lot of money that consumers are willing to allocate, which makes it difficult for anyone who hopes to create a revenue model," says Koslowski, the Gartner auto analyst.
Instead of heaping more subscriptions on people, he believes automakers may opt to build the cost of connected car systems and content into a vehicle's purchase price. Or they may opt to give away subscriptions in exchange for access to the data a car produces.
Companies may also subsidize costs through ads that would appear on a car's dashboard or car-related apps. "That may be an easier pill to swallow than dealing with a monthly payment," Koslowski says.