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I don't know how could anyone think it is a good move inside toyota. $8 falls in the range that it is irritating for consumers yet the lifetime revenue per car

I don't know how could anyone think it is a good move inside toyota. $8 falls in the range that it is irritating for consumers yet the lifetime revenue per car is probably 1% of the average car value(5 year lifetime with 2 years free means $250 lifetime revenue). Is it worth it for 1% increase in revenue.

lowbloodsugar 5y ago
Right? I'm in the market for a new SUV and I just took Toyota's off my list.
- petre 5y ago
  Subaru is doing it as well.
  - stvsu 5y ago
    Yup. Subaru offers remote start via an app at $75 for the first 3 years when you buy a new car, but it renews at $300 (prepaid for 3 years) after that. Ridiculous
brewdad 5y ago
I have no idea what Toyota's margins are like at the manufacturing level but it's not uncommon for dealers to only make a few hundred dollars profit on the sale. $250 of additional lifetime revenues could be quite significant.
- lotsofpulp 5y ago
  ~6% to 7% https://www.macrotrends.net/stocks/charts/TM/toyota/profit-margins https://www.macrotrends.net/stocks/charts/TM/toyota/profit-m...
somerandomqaguy 5y ago
It actually makes a lot of sense, unfortunately. For the new car buyer, you pitch it as cost savings for the time you own the car. The OE Toyota Long Range remote starter is $1000 so if you go with the app, if you only own the car for 8 years then you're saving money as the new car owner. However the overwhelming majority of car sales in the US are used, and the average age of the American car is now 12 years old. Outside of maintaining a spare parts supply chain, you don't gain any additional revenue from used car sales. With subscriptions, a 2020 model year car can still be generating revenue for a company in 2035. Plus you can adjust the subscription price year after year as desired. I don't like it personally, but I can see method to the madness.
csours 5y ago
Disclosure: I work for GM, anything here is solely my own opinion. Different revenue to a different organization inside the OEM. When you sell a $20k car, you get maybe $1k in profit, maybe less. If you can get $8 monthly recurring revenue you get maybe $7 in profit. Also consider that the lifetime is not 5 years. The AVERAGE age of cars on the road now is over 12 years. My parents drive 20 year old cars. Also consider the friction to cancel. Maybe you get a few more months of revenue with someone sells the car or after it gets scrapped. To be clear, I am not arguing in favor of this kind of thing at all.
- alistairSH 5y ago
  Also consider that the lifetime is not 5 years. The AVERAGE age of cars on the road now is over 12 years. Do 2nd owners typically subscribe to optional services?
  - deleted 5y ago
    [deleted]
  - elil17 5y ago
    No, but my guess is Toyota is hoping that they will for this because it’s more of a core feature
shitlord 5y ago
Where did you get the 5 year lifetime figure? Toyota's vehicles are known for their reliability and longevity.
csomar 5y ago
If Toyota margins are 1%, however... they are doubling their profit.

lowbloodsugar 5y ago

Right? I'm in the market for a new SUV and I just took Toyota's off my list.

petre 5y ago
Subaru is doing it as well.
- stvsu 5y ago
  Yup. Subaru offers remote start via an app at $75 for the first 3 years when you buy a new car, but it renews at $300 (prepaid for 3 years) after that. Ridiculous

brewdad 5y ago

I have no idea what Toyota's margins are like at the manufacturing level but it's not uncommon for dealers to only make a few hundred dollars profit on the sale. $250 of additional lifetime revenues could be quite significant.

lotsofpulp 5y ago
~6% to 7% https://www.macrotrends.net/stocks/charts/TM/toyota/profit-margins https://www.macrotrends.net/stocks/charts/TM/toyota/profit-m...

somerandomqaguy 5y ago

It actually makes a lot of sense, unfortunately. For the new car buyer, you pitch it as cost savings for the time you own the car. The OE Toyota Long Range remote starter is $1000 so if you go with the app, if you only own the car for 8 years then you're saving money as the new car owner. However the overwhelming majority of car sales in the US are used, and the average age of the American car is now 12 years old. Outside of maintaining a spare parts supply chain, you don't gain any additional revenue from used car sales. With subscriptions, a 2020 model year car can still be generating revenue for a company in 2035. Plus you can adjust the subscription price year after year as desired. I don't like it personally, but I can see method to the madness.

csours 5y ago

Disclosure: I work for GM, anything here is solely my own opinion. Different revenue to a different organization inside the OEM. When you sell a $20k car, you get maybe $1k in profit, maybe less. If you can get $8 monthly recurring revenue you get maybe $7 in profit. Also consider that the lifetime is not 5 years. The AVERAGE age of cars on the road now is over 12 years. My parents drive 20 year old cars. Also consider the friction to cancel. Maybe you get a few more months of revenue with someone sells the car or after it gets scrapped. To be clear, I am not arguing in favor of this kind of thing at all.

alistairSH 5y ago
Also consider that the lifetime is not 5 years. The AVERAGE age of cars on the road now is over 12 years. Do 2nd owners typically subscribe to optional services?
- deleted 5y ago
  [deleted]
- elil17 5y ago
  No, but my guess is Toyota is hoping that they will for this because it’s more of a core feature

shitlord 5y ago

Where did you get the 5 year lifetime figure? Toyota's vehicles are known for their reliability and longevity.

csomar 5y ago

If Toyota margins are 1%, however... they are doubling their profit.