Automakers Bet on Subscription Fees as Car Payments Hit $787

By Grace Kim

The average monthly payment on a financed new car hit a record $787 in the third quarter of 2026, up from $756 a year earlier — and automakers are now stacking subscription fees for everything from remote start to extra horsepower on top of it. Edmunds data, cited by CarPro, puts the average rate on those loans near 7%.

Asher Davis, 33, reentered the new-car market this year after nine years away and found the roster of cars with no subscriptions attached had dwindled drastically. "I feel like eventually I won't have a choice," he told Fortune. His frustration targets the market's direction more than any single fee.

Why are automakers flipping the switch?

Edmunds doesn't formally track subscription-based features, but Ivan Drury, the firm's director of insights, knows the trend firsthand. "I've got a Subaru that has the location and remote start based upon a subscription fee," he told Fortune. "And my prior vehicle, a 2024 F150, had both of those for free."

The appeal for automakers is simple. "Number one, it really is based upon the fact that they can," Drury said. Connected vehicles let manufacturers switch features on and off remotely — "flip of a switch" — even when the hardware is already installed.

Dealerships, meanwhile, "hate it," Drury said. No salesperson wants to explain that features on a customer's new car sit behind a paywall. "But they're just the middleman," he added. "It's shifting where the money's going, but at the end of the day, who's bearing the cost? The customer."

Where do drivers draw the line?

BMW tested the boundary. It charged drivers in the UK, Germany and South Korea a monthly fee for heated seats already installed in their cars — never in the U.S. — and dropped the subscription in September 2023 after swift backlash.

"Talk about leaving a bad taste in your mouth," Drury said. "You paid for a BMW, and you might get yours turned off?"

Peter Anderson, 36, a luxury car enthusiast driving high-end cars since age 14 and a half, draws the same line. "I don't want to pay for something that's already built into the car," he told Fortune. But he'll pay for genuine software gains. "If there's an update to the software that's capable of giving me better performance or a new feature, I'd pay to enable it," he said, citing upgrades to power, handling and driving dynamics.

Volkswagen — No. 1 on the 2026 Fortune 500 Europe — is testing that appetite. In 2025 it brought its "Power on Demand" subscription to the UK, letting owners of ID.3 Pro and Pro S hatchbacks pay £16.50 (roughly $22) a month to raise output from 201 to 228 horsepower. The extra 27 horsepower already sits in the car's hardware. Some customers cried foul online ("If you're OK with this dystopian nonsense, you're a sucker," one Redditor wrote). Volkswagen told Fortune that customer feedback "has been positive."

How much do these fees really cost?

Against a $787 payment, a $20 or $30 monthly subscription looks negligible — which is exactly the trap. Sue Helper, an economics professor at Case Western Reserve University's Weatherhead School and former chief economist at the U.S. Commerce Department, said the monthly figure misleads. "The important thing is to look at the total cost of owning a vehicle, not just the monthly payment," she told Fortune. "A subscription that costs a few dollars a month may seem insignificant, but multiple fees can add up over several years."

Subscriptions aren't inherently exploitative, Helper said — they can make sense for connectivity or software updates that require ongoing investment. But she draws the line at hardware baked into the purchase price. "It wouldn't be fair to say that the $50,000 vehicle is in fact not usable if a consumer doesn't pay an ongoing fee," she said. She pointed to New York City's "click to cancel" rule, in effect since Oct. 1 under Mayor Zohran Mamdani's administration, as a check on such tactics becoming "standard business practice."

What is the market saying?

Buyers' willingness to pay is slipping. In S&P Global Mobility's 2025 Connected Car Study, published in July 2025, 68% of respondents said they would pay for connected-car services — down from 86% in 2024.

Automakers are betting the decline reflects presentation, not principle: drivers who reject a heated-seat fee may still pay for a performance upgrade with clear value. Helper flagged the brand risk: "A subscription might generate additional revenue in the short term, but if customers feel they're getting less value for their money, they may be less likely to buy from that company again."

Drury worries the fees will fade into background noise as a new norm sets in. "There's huge backlash, but at the same time, if even anybody signs up, they make money," he said. "Only older people like myself are going to remember that 'Hey, that used to be free.'"