Rocket Fuel

No Substitutions: The Current Option Package System | Elio Motors Trending Topics

cThe concept of “bundling” has been used by many different industries to great success. At a fast food restaurant, ordering a burger, fries, and drink in a package is less expensive than buying them individually. Similarly, media companies will regularly offer bundled packages that include Internet, cable, and phone service at a discount. The automotive industry has long offered option packages, which include premium features, to a vehicle, often at a high price to the consumer. Option packages can include pricey items the consumer might not want or use. Consumers rarely have the power to select only the options they want in their vehicles.

According to Autotrader “There’s no doubt that bundling options helps manufacturers increase the price of their vehicles and therefore make some extra money. A driver who wants heated seats, for instance, might pay an extra $2,000 just for a package with those features — even if he or she doesn’t really want the items in it. In turn, the automaker likely gets a large discount from its parts suppliers for selling so many options, which allows for more profit they wouldn’t otherwise get from a driver who just chooses heated seats.” The current option package business model forces the consumer to pay more for a vehicle that is loaded with expensive, unwanted options.

Not only are option packages expensive for consumers, they also make for a poor investment. It is common knowledge that as soon as a vehicle is driven off the lot, it loses value, but so do the options inside the vehicle. According to Consumer Affairs, option packages actually lose value quicker than the vehicle. The article believes that after three years “the car may have lost about 60% of its value but the options package lost up to 85% of its value.” With technology evolving at an astounding rate, tech features that come in a pricey option package quickly become outdated and do not add to the resale value of the vehicle.

So, is the option package system worth keeping? The Harvard Business Review believes “unbundling or a la carte pricing benefits the buyer and packaged or bundled deals give the advantage to the seller.” Several major automakers claimed to have done away with the option package system, but upon closer inspection, that does not appear to be the case. When automakers claim to let their customers select their options a la carte, their vehicles typically come equipped with premium options in a standard package. For example, an automaker may claim to offer their customers the freedom to choose their own options, but navigation, a rearview camera, and heated seats already come standard. In this case, there are not many “options” to choose from, because most of them are already included in the base model.

The option package system has long been beneficial to automakers at the expense of the consumer. One solution is for automakers to have an extensive relationship with the aftermarket, which would make it easier for the consumer to receive a vehicle that has everything they need and want. By kicking the option package system to the curb, automakers can empower consumers to purchase a vehicle that has all the features they want and not force them to purchase an expensive package. The automotive industry should move further away from a “no substitutions” mentality to a more “made to order” philosophy.

Share Button