Toyota reveals desire to charge customers for new features added through over-the-air software updates
James serves as CarsGuide's Deputy Editor, drawing on over four decades of automotive editorial experience gained at Wheels, Drive, Carsales, Motor and Top Gear.
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Key takeaways:
- Toyota to massively increase post-purchase profits
- Upgrading or adding features over-the-air
- Beware the BMW backlash
Already the world’s biggest carmaker by sales, Toyota is looking to massively increase profit through post-purchase options including software updates, a focus on genuine spare parts and used car sales.
That’s according to a report from NikkeiAsia, which said Toyota is aiming to lift profit generated outside new car sales by 40 per cent by 2030.
That would represent a figure of ¥3 trillion (~A$26.7 billion) in that financial year with the Japanese giant identifying growth opportunities from the roughly 150 million Toyotas already on the road globally.
To put that targeted increase (from the ¥2.1 trillion recorded for the Japanese financial year ending March 2026) into perspective, it would be equivalent to about 80 per cent of Toyota's current annual consolidated operating profit.
More software-defined vehicles
The report notes an increasing number of software-defined vehicles (SDVs) on the road globally, which are able to be enhanced via over-the-air (OTA) software updates, upgrading or adding features including safety tech, multimedia functionality and powertrain calibration.
Toyota's SDV strategy is underpinned by Arene, a software platform developed by the brand’s in-house tech subsidiary, Woven by Toyota, which its CEO Hajime Kumabe describes as “Toyota’s tugboat into the future”.
Toyota has launched a paid service that allows GR Yaris and GR Corolla owners to add a cooling function for the electronic control system of their car via a smartphone app.
And it’s worth noting the latest-generation RAV4 features the company’s proprietary Arene software platform.
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BMW backlash
But Toyota must surely be aware of BMW’s chequered history with software-based subscription sales.
The German maker’s focus on ‘in-car commerce’ emerged in 2022 in parallel with the proliferation of automotive subscription services and the increasing efficiency of over-the-air updates.
Pitching monthly fees in a variety of markets for everything from heated seats and remote engine start to adaptive cruise control and Apple CarPlay was not well received by existing and prospective BMW owners.
In fact, a consumer backlash based on peoples’ perception they were paying to unlock a function or capability already present in the car they’d bought led to low take-up rates and the company has subsequently eliminated ‘paywalling’ physical, built-in hardware features.
Other profit opportunities
As well as OTA update-driven sales, the report said Toyota will broaden its spare parts business globally.
A recently opened warehouse in Belgium has created a structure that enables parts supply from 16 regional hub warehouses to 50 countries.
And in markets like Italy and eastern Europe, where average car ownership is a lengthy 15 years, Toyota plans to ramp up and promote its spare parts supply capabilities.
Additional emphasis on lower-priced used cars is also set to lift Toyota Japanese domestic used-car sales from the current 350,000 to 550,000 units by 2030.
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James serves as CarsGuide's Deputy Editor, drawing on over four decades of automotive editorial experience gained at Wheels, Drive, Carsales, Motor and Top Gear.
About James