Over the last seven years, we've seen the variety and complexity of features grow, whether that be through technological advancements or enforced legislation for the safety of vehicle occupants. In this article, we will be exploring how feature & package pricing is affected, the relationship with standard fitment, and what impact this has on the market.
Three sectors of features will be analyzed in this newsletter; Advanced Driver Assistance Systems (ADAS), Infotainment, and Comfort and Convenience. Please note: Some features, due to their release date, have not got seven years worth of data to analyse. In this instance, they will be analysed from the year closest to their release.
ADAS
With the requirement for safer cars becoming ever more present in modern transportation, it is no surprise that the demand for driver assistance systems is increasing, not only from a consumer perspective, but also from a legislative perspective as well. The chart below shows the percentage price change over a seven year period from 2013-2020 for seven key ADAS features.
Infotainment
With comsumers being able to control almost every aspect of a vehicle from the infotainment system, the demand for more advanced and powerful systems and features is growing, along with more features being provided as standard fit to differentiate. The chart below shows the percentage price change over a seven year period from 2013-2020 for seven key infotainment features.
Comfort and Convenience
Modern day vehicles need to have an interior that consumers want to be in, and stay in for long periods of time; an interesting trend was observed here with prices remaining relatively stable, this is likely due to significant part costs that OEMs find difficult to meaningfully reduce. This is further exacerbated by increasing complexity, such as the move to panoramic sliding moonroofs with sunshades as opposed to the more traditional and cheaper options.
The Comparison
The best way to start comparing the three sectors against each other is to first compare each feature within those sectors against each other. This graph below shows the % price change of each feature, where the price in 2013 is compared to the same feature price in 2020.
Causality
The main reason for the decrease in price can be seen to be the increase in features being included as ‘standard’ on vehicles. The relationship between these two figures is correlated as an inverse relationship; as the number of features included as standard increases, the average price of the feature across the market decreases. Another cause of feature pricing decrease is influence from the consumer. Consumers are expecting more and more features to be included as standard as the price of vehicles increases year-on-year. As a feature progresses, the cost of fitment typically decreases, and therefore can be included as standard by the OEM. The interactive chart below shows how the average price of features in each sector decreases as the rate of standard fitment features increases. Please select which sector to view using the drop down menu to get the appropriate chart.
What Does All This Mean?
ADAS
With increasing pressures from transport agencies and their regulations, the demand for the safety of vehicles to keep improving is higher than ever. It's these pressures that are forcing more and more ADAS features to be offered as standard fit options or at a reduced cost to the consumer. Using Forward Collision Alert / Avoidance as an example, since 2013, the average price of this feature has decreased by 87%, and the standard fitment rate has increased by 1850%; with 81% of models that offer the feature, offering it as a standard fitment. In 2013, this number was only 15%.
Infotainment
Infotainment feature pricing has been comparatively very stable when compared with ADAS or Comfort and Convenience, this is mainly because they're usually offered as part of a larger technology package that usually doesn’t vary in price as much as an individual option would. Another reason is that packages such as SiriusXM are offered as a subscription service, which won't vary in initial fitment price much due to the money being made in the subscription. Features such as Android Auto and Apple CarPlay were very quickly commoditized due to their high demand from consumers; we expect to see a very similar trend when wireless versions of these features become commonplace in the near future.
Comfort and Convenience
Comfort and Convenience features, in the grand scheme of things, have followed the same trend as ADAS and Infotainment, albeit on a smaller scale. This feature category actually saw two feature sets increase in price over the last seven years. Heated seats is an example of this increase, with a trend of it being included in a larger convenience packages. Also the material cost of these features are much harder to reduce such as heating elements vs displays & sensors which benefit from technological improvements and economies of scale from the Consumer Electronics industry.