With the number of optional features on vehicles increasing year on year, which features do customers really value the most? In this newsletter, we will be attempting to best answer this question and provide insight as to why specific features do well, and why others may not be performing as well as they should.
Three feature catagories have been selected to be analysed in this newsletter, each with three features of their own; Advanced Driver Assistance Systems (ADAS), Infotainment, and Comfort and Convenience. All the data used on these three feature catagories is taken from the year 2019 as the full data set for 2020 is not available yet.
Analysis
The charts below show the cost of a feature as a percentage of the vehicle MSRP against the feature penetration rate for all features analysed. This allows us to see any trends occuring and how customers react to a variation in pricing of features for different vehicles. The vehicles shown have been split up into 'Premium' and 'Mainstream' OEMs to help show any differences between the two types of manufacturers and their customer base. A trendline has also been added for both premium and mainstream vehicles to show the overall trend of the data across the whole penetration and pricing range.
Please select a feature from the drop down list at the top of the chart below.
Adaptive Cruise Control
The trendlines shown on this chart signifies that as the percentage price of the feature decreases, the penetration rate increases; this is as expected for both premium and mainstream vehicles.
A noticable trend here is that for the majority of premium vehicles, to be able to obtain greater than 50% penetration rate, the price of the feature needs to be below 8% of the vehicle MSRP.
Its a similar story with the mainstream vehicles as well, with the price of adaptive cruiswe control having to be below 6% of the vehicle MSRP to get greater than 70% penetration.
Blind Spot Monitoring
A key item to be noted here is that there appears to be a distinct lack of premium vehicles shown on this chart, this can be explained by the fact that BSM is offered as standard at a much higher rate than it is on mainstream vehicles. The trendline flows downwards for both premium and mainstream vehicles as expected, with penetration rate increasing as percentage price decreases.
Some other notable points here are that the large majority of premium vehicles have a very high penetration rate, upwards of 75%, with a percentage pricing of between 1% and 8%. We see this typically because this feature is often bundled with other features in a 'technology' package for example, which has a high chance of being fitted on more premium vehicles.
For mainstream vehicles, BSM tends to be marketed as part of an ‘ADAS package’, which means that in order to get BSM, the user must also purchase the other features included in said package. This explains why for some vehicles, the prices can go upwards of $2500. As you’d expect, we also see a very tight correlation with the Rear Cross Traffic Alert feature.
Lane Departure Prevention
The layout of the data can be seen to be very similar to that of Adaptive Cruise Control, this is because the two features are normally sold together and use the same sensor set during operation on suitable roadways.
The lesser number of premium vehicle data points is pointing to the standard inclusion of this feature. However, those Premium OEMs that offer the feature as an option, are almost always offering it at or below 8% of the vehicles MSRP.
For volume OEMs we see a similar step down as with Adaptive Cruise Control as previously mentioned. There is however a difference when we look past 90% penetration for volume OEM’s, we expect this is because of some LDP systems being packaged with other features outside ACC that can leverage the front camera alone such as Forward Collision Warning.
Premium Audio
The trendlines seen for this feature are seen to be a lot flatter than other features, indicating that vehicle price doesnt play a massive role in what the customer is willing to pay.
Premium OEMs are far more likely to equip a premium audio system as standard, this is backed up by the lack of premium vehicles shown in the chart compared to mainstream vehicles. It can be seen that some premium OEMs are able to attain near 100% penetration for their premium audio systems. This is likely due to the fact that people who buy a more expensive car are more likely to spend extra money on optional extras.
For mainstream OEMs, there seems to be two price bands that customers are willing to pay for premium audio. The 1-3% price range is seen to be popular across the whole penetration range for both mainstream and premium vehicles, this price range likely gives the customer an audio system with 6-12 speakers. The second price band is the 5-10% range, this band features a large number of vehicles in the 20-70% penetration rate, with the price being too great to achieve a higher penetration rate. This price band would likely get the customer a top of the range 12+ speaker audio system.
Wireless Charging
With wireless chargin being a relatively new technology, and one that not everyone is using yet, its no surprise that there are fewer vehicles with the option available. Interestingly, in most of the instances where wireless charging is available, the penetration rate is greater than 50%, showing that the demand is there should the customer have a wirless chargin phone.
The large number of vehicles with close to 0% penetration shows that this is still an emerging technology that has not been mass adopted yet. One large reason that could be holding back wirless charging is the mass usage of wired Android Auto and Apple CarPlay. Once the wireless counterparts of these features become more prevalent, we expect to see the demand for wireless charging to follow suit.
It can be seen that premium vehicles sit at higher penetration rates for wireless charging. This is expected because people who buy premium vehicles are more likely to have a smartphone that is also premium and has wireless charging technology. We also see that a large number of premium vehicles have Wireless Charing included in sizeable ‘convenience’ packages that have other driving forces.
Head-up Display
Similar to wireless charging, Head Up Displays tend to be more popular on premium vehicles, with several of them coming equipped with it as standard and many of them having good success with it being optional. A common price point of offering this feature is between 1%-6% of the vehicles MSRP.
Mainstream OEMs also offer this feature, but in much lower numbers. The penetration rate can be seen to be lower aswell, with consumers of cheaper vehicles potentially not deeming it to be an essential option they need. The percentage price can also be seen to be higher for mainstream vehicles when compared their premium counterparts, this is likely due to the fact that a head-up display would be included in a larger technology package and not sold as an individual option like it would be on a premium vehicle.
Ventilated Seats
Very much a feature aimed a premium OEMs and their vehicles, ventilated seats can be seen to have a much higher take rate with preium vehicles than with other mainstream vehicles. The feature has a very flat trendline, indicating that penetration rate doesnt necessarily go up as percentage price goes down; instead almost all offerings of this feature from preium OEMs comes within the 1%-6% price range.
Mainstream OEMs follow a more expected trend, with percentage price decreasing as penetration rate increases. However, the percentage price to equip ventilated seats on a mainstream vehicle is a lot higher than whats seen on premium vehicles. This is likely due to the feature being twinned with a either a full interior or at minimum a full seating upholstery upgrade.
Heated Steering Wheel
The trendlines displayed for this feature show us that penetration rate is not impacted by the features percentage value, and this is the same for both premium and mainstream OEMs.
A key insight to be gained from this is that premium OEMs are offering this feature at a much lower price as a percentage of the vehicles MSRP. This may be because all OEMs are offering this feature at a similar price, but with the premium vehicles having a higher MSRP, it appears cheaper when shown as a percentage of that value. Almost all premium OEMs are offering this feature at a price that is less tha 2% of the vehicles MSRP.
Mainstream OEMs seem to be having a similar success in terms of penetration rate, but at a higher percentage price as explained above. This may be because the feature is being included in a climate or comfort package, which therefore increases the price of the feature to the customer.
Heated Drivers Seat
This feature shows a very similar result to what was seen for the heated steering wheel feature, with two pretty flat trendlines signifying there is little relationship between the price percentage and penetration rate for both premium and mainstream OEMs.
Premium OEMs are offering this feature at a lower percentage price of the vehicle MSRP, and are seemingly offering it more as standard as well, with fewer premium vehicles being shown on this chart. Similarly to the heated steering wheel feature, the reason for the lower percentage price is more then likely down to the feature being a similar price for both premium and mainstream OEMs, but with the premium vehicles haveing a higher MSRP, this brings the percentage price down.
Mainstream OEMs seem to have a similar take rate when compared to premium OEMs, but at a high percentage price. Which is more than likely due to the feature being a part of a larger upholstery or comfort package.
Which Features do Customers Value the Most?
Using a score created by finding the sum of the feature package price and the features penetration rate, we can determine which feature customers are most willing to pay for, and are therefore most valued. The results can be seen in the chart below.
As can be seen in the above chart, the features with the most value to customers are as follows:
ADAS - Adaptive Cruise Control
Infotainment - Head-up Display
Comfort and Convenience - Ventilated Seats
Conclusion
This newsletter has provided an insight into what drives customers to or not to purchase certain features for their vehicles. It has highlighted both pricing and penetration trends from both premium and mainstream OEMs, including instances where the price has little to no effect on the penetration rate. There can be seen to be some clear limits to what customers are willing to pay for certain features, and once this is exceeded, the penetration rate demonstrates this.
In conclusion, this newsletter demonstrates the power the customer has in determining the success or failure of a feature in the industry, highlighting what the customer wants, and what they are willing to pay for it.