Quote:
Originally Posted by wtwo3
I'm willing to bet the opposite. I'm willing to bet the cars will be cheaper to manufacture. As someone who leads a supply chain optimization department, this is a dream come true from a manufacturing and distribution standpoint because of the cost savings associated with an optimized model, across ALL nodes of the supply chain.
This model benefits both parties - BMW and the consumer.
For BMW there's 2 main benefits here:
1) Optimized supply chain across all nodes of the network - from sourcing, distribution, inventory management, and even forecast accuracy - all brought on by minimizing production variation. It opens up a completely new realm of contract negotiations for the sourcing team, you're now better able to maximize truck utilization on the distribution side, inventory is much more predictable which enables better planning and lower cost, and your forecasts improve in accuracy due to the lower variation. ALL of this leads to minimizing cost and improved margins. So in reality, this shouldn't cost any extra for the consumer, and in some instances may even end up being cheaper.
2) BMW is banking on the "try before you buy" model to increase conversion rates of consumers that are on the fence for options. Consumers are more likely to fork over money for an option they can try out if they're unsure of its benefit prior to having tried out. In a static model as is today, most consumers in that situation are likely to skip out on the option and then that option remains outside of possibility for the life of the car (most options can't be retrofitted, at least not reasonably).
For consumers there's one BIG benefit which manifests itself in various ways: FLEXIBILITY
Certain options I can use seasonally (i.e. heated seats only in the winters). I'm free to do the break-even analysis to determine if paying for the lifetime subscription of that feature nets out cheaper or if paying for it seasonally over the course of however many years I plan to keep the car would be cheaper.
Then there's the try before you buy model which also benefits me as a consumer. Just look at any sub forum on here - there's usually a thread on if X feature is worth it or not. Well with this model that removes the ambiguity behind such a thing - I'll just simply try it out and if I don't like it or find it useful, I can rest easy knowing I didn't waste $X paying for that feature when ordering my car.
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Bingo. It will probably cost BMW less to manufacture all vehicles with the same specs vs try to manage specific lines for specific features. Plus they will get more money from microtransactions worldwide vs what they may lose in manufacturing costs to put heaters in every vehicle. Now folks who may not have thought about heated seats have the chance to try it, and they will likely be sold on them.
My only issue is this, I've seen things state features like M Suspension are going to be subscription based as well. So now someone who has to replace suspension components has to deal with the cost and complexity of M Suspension when it's a feature they don't use or want.