With the potential to generate €25 billion in annual revenue, options can be both a key profit lever for OEMs and an added cost for customers. Striking the right balance between offering value and maximising profitability is a crucial focus in the product strategy.

When considering the price of a car, it is common to focus on the variations in list prices and discounts. However, there is another cost borne by the customer which can reach thousands of euros but is not considered in inflation or pricing indexes: options.

Using data from JATO’s Transaction Analysis and Volumes solutions, we explore recent options trends across the EU5, concentrating on brands, powertrains, and vehicle segments, and examining how options influence OEM’s product and pricing strategies.

Car options and revenue

Options are add-on features that supplement a new vehicle beyond its standard equipment. This includes individual options, packages, paint choices, seat upgrades, and other selections. For the purpose of this article, we will be defining all additional features that are purchased together with a new car and generate extra revenue as optional.

Option data and fitment rates collected by JATO from hundreds of thousands of transactions across the five major European markets (Germany, Great Britain, France, Italy, and Spain) highlight the potential profit optional add-ons can contribute. In 2024 (YTD July), an average of 2.9 options were added to every car ordered, boosting the sale price by an average of €2,154. With 5.5 million passenger cars registered in the EU5 over this period, options generated an estimated turnover of nearly €12 billion in just the first part of 2024.

However, in recent years, the number of options purchased has decreased. This trend has seen some brands include more features as standard, while others continue to give their customers a wider range of choice. This change is ongoing, but the amount of revenue that options contribute overall remains considerable.

Product enrichment versus optional features

Over the past three years, we have recorded that the average car retail price on transactions has increased by 6.7%, while the amount spent on options has decreased. Cars ordered in 2021 had an average of 4.4 options added, with a price tag of €2,871, accounting for around 8% of the total retail price. Today, the average revenue from options is €717 less, and accounts for 6% of the retail price.

The shift away from options can be partially explained by automakers focusing on ‘product enrichment’, which increases the number of standard features in a car and, as a result, reduces the opportunity to sell options. For example, in 2021 in Germany, 93% of cars sold had a rear parking distance system, with 43% of those vehicles having the feature as standard and 50% adding it as an option. By 2024, the percentage of cars with this feature as standard shifted to 60%, versus 36% as an option. Similarly, the number of cars with navigational systems included as standard has grown from 32% to 45%, while upgrades have decreased by 11 percentage points.

The product enrichment effect, combined with inflation in recent years, has led to an increase in retail prices. As prices have risen and spending on options has fallen, the option share of retail prices has decreased to 6%, with an average of 2.9 options purchased per car.

While the figure spent on options has decreased in recent years, they remain popular with consumers and still contribute significantly to many OEM’s revenues. In 2023, there were 9.1 million passenger cars registered in the EU5, with an average of €2,761 of options added per car. We can estimate that optional features provided a remarkable turnover of around €25 billion.

Source: JATO Transaction Analysis Orders 5MM YTD July 2024

Option uptake across automotive segments

The average revenue contributed by options varies significantly across different segments. In smaller vehicle segments (A and B), option revenue is below €1,000, with fewer than two options per car. Moving up by segment, the spend on options almost doubles from one segment to the next, along with an increase in the number of options chosen and a rise in the average price per option.

In segment A, the average price per option is €500, while in segment E and segment E SUV, it ranges between €1,200 and €1,300. Additionally, the share of option revenue as a percentage of the retail price increases, starting at 3-4% in segments A and B, reaching 5% in segment C, and rising to 18% in segment E.

Another interesting point is that in segments D and E, the average price paid for options on SUVs is lower than for conventional body styles. This could be explained by the different mix of mainstream and premium brand sales in these segments. In segment D SUV, premium brands* account for 58% of the sales mix, according to registrations as of YTD July 2024, whereas for conventional body styles, they reach 72%.

There are also significant variations in which options are most popular across the segments. For example, in segment A (city cars), rear parking sensors consistently appear in the top three most upgraded features across all countries. Its popularity highlights that though it is not a standard feature in this segment, customers find a rear parking sensor useful despite city cars' short length.

           Source: JATO Transaction Analysis Orders 5MM YTD July 2024

JATO segments

Option uptake across automotive brands

The average option revenue by make for the top 10 brands highlights the different strategies adopted by various brands and groups.

German Premium brands (Mercedes, Audi, and BMW) rely more on optional features, generating on average between €7,000 and €10,000 of revenue per car, with 7 to 10 options sold per vehicle. Notably, Mercedes sits significantly ahead of its competitors, generating an average of €10,584 of revenue from options per car.

In comparison, mainstream brands’ revenue from options range from slightly less than €1,000 to €3,000. Toyota, for example, sells most of its cars without additional options, with an average of 0.4 options chosen per vehicle.

Source: JATO Transaction Analysis orders 5MM YTD July 2024 – Brands selected: Top 10 brands passenger cars in the 5MM in order by ModelMix registration YTD Jul 2024

Option uptake across powertrains

With the ongoing growth of new energy vehicles, it is interesting to consider how powertrains, including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), impact the number of options sold. Analysis of transactions in 2024 (YTD), shows that PHEVs and BEVs sell more options on average than conventional combustion engines (ICE).

Despite BEV trim structures typically being less complex, and therefore selling fewer options compared to other powertrains, the price per option tends to be higher than others, with an average cost of €1,006 each.

Focusing on the PHEV results and cross-referencing the data with registrations reveals that there is a strong presence of German premium brands such as Mercedes, Audi, and BMW. These marques account for 38% of the mix and, as mentioned in the segment analysis above, sell more options per car, explaining why the average revenue from options for this powertrain is so high.

There are also some notable trends when looking at the choice of options by powertrain. For example, in BEV products, heat pumps rank third, with an average price of nearly €1,000. This could be interpreted as the customer’s awareness of the importance of vehicle efficiency and their willingness to pay for improvements related to sustainability.

Source: JATO Transaction Analysis Orders 5MM YTD July 2024

The role of options in the wider product and sales strategy

In the hypercompetitive automotive landscape, with new players entering the market and profitability constantly shrinking to maintain competitiveness, pricing and options continue to play a strategic role. While OEMs have used options to generate revenue for some time, there is now a focus on getting the balance between standard features and upgrades right. By offering the right mix, brands can create efficiencies while continuing to cater to customer’s wants and needs.

Options can enhance the customer experience by offering more customisation opportunities. In today’s market, the German premium brands, provide a rich optional offering, designed to generate additional revenue through deep understanding of customer needs and preferences.

On the other hand, some brands have pivoted to a leaner option strategy, offering an ‘all-inclusive’ product by including more features as standard. For example, Toyota has a very limited choice of options, whereas BYD includes nearly all paint options as standard. This 'all-in' approach can enhance equipment offerings and, if tied to cost optimisation in production, improve the overall product's competitiveness.

To determine the best strategy for a brand looking to maximise revenue, the cost structure must be analysed at a model level, feature by feature, considering customers’ willingness to pay for each addition. This will help identify which features could be removed and sold as optional and which are better kept as standard. The likelihood is that most OEMs’ option strategy will fall somewhere in the middle of these two approaches.

*Main premium brands: Alfa Romeo, Alpina, Audi, BMW, DS, Genesis, Jaguar, Land Rover, Lexus, Maserati, Mercedes, Nio, Polestar, Porsche, Tesla, Volvo, Xpeng

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