Mumbai: India's connected-car market is discovering that selling software is easier than monetising it. As internet-enabled features become standard across new vehicles, automakers are finding it far harder to persuade customers to keep paying for connected services once complimentary subscriptions expire, testing the industry's software-driven revenue ambitions in India's price-sensitive market.

The trend marks the first reality check for carmakers betting on recurring software revenues. According to people familiar with subscription trends across manufacturers, renewal rates at some companies fall below 20% once complimentary subscriptions end, even as automakers continue investing heavily in telematics, cloud platforms and digital services. “The first phase of connected vehicles was engineering, the second phase is customer engagement, and the third phase is monetisation,” said Ravi Bhatia, president, Jato Dynamics. “The carmaker that succeeds won't necessarily be the one with the most connected features, but the one that creates digital services customers value enough to keep using throughout the ownership lifecycle.”

Growing Adoption

Globally, nearly 350 million connected cars are on the road. They account for about a fourth of cars in India and that number is rising. Between 2022 and 2026, features such as remote vehicle access, remote AC control and battery management, driven largely by electric vehicles, have seen rapid growth.

Leading manufacturers including Maruti Suzuki, Hyundai Motor India, Tata Motors, Mahindra and others offer connected platforms bundled free for periods ranging from one to four years before customers are asked to pay. While most automakers declined to disclose renewal rates, they maintained that adoption of connected technologies continues to grow.

Hyundai, which has more than 832,000 connected vehicles on Indian roads, said just over one in five customers continue with paid Bluelink subscriptions after the complimentary three-year period, underscoring the broader challenge facing the industry.

“Bluelink is engineered as a full-stack digital ecosystem,” said Tarun Garg, MD and CEO, Hyundai Motor India. . “Hyundai has taken this a step further with the Connected Car Navigation Cockpit (ccNC), accelerated by Nvidia, debuting in the new Venue, delivering a more intuitive and future-ready in-car digital experience.”

Want a Rolls-Royce or Land Rover? Premium cars to go cheaper by Rs 1-3 crore thanks to UK FTA

EV OWNERS MOST ENGAGED

Electric vehicle owners are among the most engaged users, actively leveraging connectivity for battery status, charging management, route planning and in-car charging payments, said Garg.

The industry's challenge is not consumers' willingness to pay recurring subscriptions. Indians already pay for mobile connectivity, entertainment, cloud storage and digital productivity. The bigger issue is that connected-car services have yet to become indispensable to the ownership experience.

The first generation of connected vehicles focused on convenience—remote lock and unlock, vehicle tracking, remote air-conditioning and vehicle health reports. While useful, these services are often used only occasionally, making it difficult for many customers to justify paying once the complimentary period ends, say experts.

Automakers are of the view that the next phase of connected mobility will be driven by software that supports core ownership functions rather than optional conveniences. This is true particularly in electric vehicles where connectivity powers battery monitoring, charging management, energy optimisation and route planning.

At Mahindra, that shift is seen in its latest electric vehicles.

“Features like the three-screen digital cockpit and Vehicle GPT are making our vehicles smarter, more connected, and this is especially evident in premium EVs like the XEV 9e and BE 6, where customers expect seamless digital connected services and regular feature updates," said Velusamy R, president, automotive business, Mahindra & Mahindra.

The industry's next competitive advantage will not come from adding more connected features but from creating services that customers are willing to pay for throughout the ownership lifecycle.

Tata Motors launches Sierra 'Jubilee Edition' to mark 50,000 SUV sales: Price, features and more

As software-defined vehicles become the norm, success will increasingly be measured not by how many cars are connected, but by whether those connections deliver enough value for customers to keep subscribing after the complimentary period ends.