GM: The New Service Company

[DuSpinnst]

Interesting perspective. My father never has paid for OnStar (he only got it when it came with a package), but I have a friend who has it on his car (and renewed it). I specifically added OnStar to my Saab (was one of the reasons for going with the 2007 as well). I will renew the Safe & Sound plan as well.

65% is actually quite realistic if you think about how many cars that DO NOT have OnStar standard. When GM makes OnStar standard across the board, that number will drop.

The TRUE take rate of OnStar is that 65% times the % of cars that have OnStar Equipment.

[xPUMPx]

its OnStar

[01cavalier]

GM was smart in bringing this out, and it is a great selling point. Safety sells in a lot of people's mind, and the extra benefis of navigation make sense. There are enough people that do not want to have to buy new DVDs for the navigation system to keep it up to date. I'm sure that the investment from GM for this system was not large.

[Geotpf]

This is a great way for GM to print money (and provide a service to the customer in the process). Basically, GM would be in much more trouble without On Star.

However, in some ways, this discourages GM from offering services that customers want, such as real navigation systems or Bluetooth, because they consider those services to be competition with On Star. This is a deal breaker for some people, causing them to buy a non-GM product.

[Geotpf]

Originally Posted by Squashman

No, Toyota did not invent anything. Lexus just wanted to change the name but it is still using OnStar's technology. Going forward, I believe it is going to become exclusively available on GM products (no more for Acura, VW, etc)

Toyota/Lexus may license the entire package from GM; hell, GM may even run Lexus Link for them, but there's no indication that it's going anywhere.

http://www.lexus.com/lexuslink/

However, it looks like all the other brands have dropped On Star itself. On Star is to closely assocaited with GM at this point, I think (one of the reasons Lexus doesn't call it that).

[DuSpinnst]

Originally Posted by Geotpf

This is a great way for GM to print money (and provide a service to the customer in the process). Basically, GM would be in much more trouble without On Star.

However, in some ways, this discourages GM from offering services that customers want, such as real navigation systems or Bluetooth, because they consider those services to be competition with On Star. This is a deal breaker for some people, causing them to buy a non-GM product.

You get that accusation especially when you see European Saab's (Sans OnStar) with Bluetooth and Hands Free Calling.

[WhenenRome]

Originally Posted by 1G6

In the spirit of keeping the cash flow going, I hope GM introduces an upgrade for the analog cars that will become OnStar-inoperable in 2009. I've been told that everything from 2004 on back is history when the analog cell systems are turned off.

What you've been told is not entirely true. Many 2004 models were equipped with the digital version, as is my Bravada. (Though for me, it's a moot point because I'm one of that asserted 35% that opted not to renew after the first year - To me, there isn't much it can do that a cell phone & 1-800-442-OLDS or 911 can't! )

[mike's 01ws6]

Originally Posted by rhvfd10

Are you sure that is on star? I had heard that it was Toyota' own creation.

Nope its definitely is gm's

[svx92]

In purchasing our SAAB I hadn't expressly looked for Navigation, but it was on the car with the other options I wanted.

Now that i have it, I love the display screen and directional indicator, I like the voice over component as well. I could GM offering DVD based Navigation with the real time driving directions coming from OnStar simultaneously instead of the car automated voice. A draw back to the DVD system is the need for updates as road construction changes which i assume OnStar would easly have updated road digests regularly based on the economy of scale of offering the service seemlessly for subscribers.

Come on GM think Win/Win-- sell a $2,000 nav system and an enhanced OnStar subscription.

[Murrow]

Originally Posted by rhvfd10

Are you sure that is on star? I had heard that it was Toyota' own creation.

This is from a 6/27/05 "Automotive News" article:

"Among carmakers not affiliated with GM, only Toyota's Lexus Division has announced an expansion of its OnStar offerings. Lexus will market OnStar under the brand Lexus Link on the 2006 GX 470 and LX 470 SUVs as a safety and security tool. For 2007, the company says it plans to expand the service to some GS and LS sedans.

Lexus stopped offering OnStar in 2003 before bringing it back for the two models in 2006. It stopped offering Lexus Link because of hardware costs associated with the wireless industry's switch from analog to digital networks.

Lexus says those considerations have ended. OnStar, like many wireless cell phone carriers, now operates on a digital network. The digital network gives OnStar greater ability to send and receive data."


Here's the entire article:


As GM pushes OnStar, other brands bail out

Greg Bowens | | Automotive News / June 27, 2005 - 6:00 am


DETROIT -- As General Motors expands its promotion of OnStar in GM cars, other automakers are dropping the service, which they say has appealed to very few customers.

And that's fine with GM, which no longer is promoting it aggressively to competing brands.

Audi and Subaru stopped selling the push-button communication system on new cars this model year. Volkswagen will stop offering it next model year. Volkswagen owns Audi.

Honda's Acura Division may drop it as well, says Dan Bonawitz, vice president for corporate planning and logistics at American Honda Motor Co.

"It is a subject that we are giving serious consideration," Bonawitz says. "Initially, OnStar was trying to attract many different customers and was promoting OnStar. Now their strategy has shifted to equipping almost every vehicle and promoting GM and OnStar very, very tightly."

Car executives say the close association that GM has built with OnStar, low customer acceptance and emerging technologies make OnStar less attractive to GM's competitors.

OnStar is a two-way wireless communication system between drivers and GM. OnStar reports it has about 3 million subscribers across GM and import brands.

The basic service is called "Safe and Sound." For $16.95 a month, or $199 a year, OnStar monitors vehicle locations and will send emergency vehicles when airbags deploy in an accident.

The "Luxury and Leisure" package cost $69.95 a month, or $799 a year, for services such as personal concierge, remote vehicle diagnostics, driving directions and roadside assistance.

A tough sell

Volkswagen says it's having a hard time selling subscriptions.

"Our take rates at Volkswagen are running less than 1 percent," says spokesman Patrick Hespen.

He says installation for OnStar was running around 12 percent for all Audi models when they discontinued offering it on new vehicles.

At Subaru, "We did not see the subscription renewal or desire from the customers warranting keeping it," says spokesman Dominick Infante. "We are studying the possibility of getting OnStar again."

Subaru would not provide subscription rate numbers for any of the years it offered OnStar. GM owns 20 percent of Subaru's parent company, Fuji Heavy Industries Ltd.

Among carmakers not affiliated with GM, only Toyota's Lexus Division has announced an expansion of its OnStar offerings. Lexus will market OnStar under the brand Lexus Link on the 2006 GX 470 and LX 470 SUVs as a safety and security tool. For 2007, the company says it plans to expand the service to some GS and LS sedans.

Lexus stopped offering OnStar in 2003 before bringing it back for the two models in 2006. It stopped offering Lexus Link because of hardware costs associated with the wireless industry's switch from analog to digital networks.

Lexus says those considerations have ended. OnStar, like many wireless cell phone carriers, now operates on a digital network. The digital network gives OnStar greater ability to send and receive data.

Isuzu will continue to offer OnStar as an option on the 2006 Ascender. GM owns 12 percent of the company and makes the Ascender for Isuzu.

Brand recognition

OnStar is focused on helping GM sell cars and trucks. This year, GM announced that OnStar would become standard on all retail vehicles it produces. The company also said it would begin marketing OnStar aggressively as a GM brand. The idea is to link the service's safety and security appeal with GM vehicles to help drive sales.

"GM first," said OnStar President Chet Huber in an interview last week. "There will be millions and millions of GM vehicles produced equipped with OnStar."

Huber said OnStar has no plans to court new non-GM automotive manufacturers or keep existing ones. He said OnStar is willing to allow non-GM automotive customers to brand the service, as Lexus did with Lexus Link.

"We have relationships today with other manufacturers, and we will absolutely commit to fulfill everything we've got out there," Huber said.

The company declined to detail how many non-GM monthly subscribers it had or release figures on its advertising or operating budgets.

[goblue]

Originally Posted by WhenenRome

What you've been told is not entirely true. Many 2004 models were equipped with the digital version, as is my Bravada. (Though for me, it's a moot point because I'm one of that asserted 35% that opted not to renew after the first year - To me, there isn't much it can do that a cell phone & 1-800-442-OLDS or 911 can't! )

Hmmm. It can call 911 for you and tell the operator what ditch you are in. You'd have trouble doing that if you were unconscious - or even disoriented from the giant bag that exploded in your face. But it does it automatically.

It can find your stolen car, and it can tell you where you are even when you don't know which way is north, and it can help keep you from running out of gas.

Its basically a huge conveience feature that in rare circumstances can save your life. And yes, there are people out there whose lives this has already saved.

[Hoosier Red]

The problem is exactly what's already been hinted at.....what's going to be perceived as more sophisticated? A Civic with a nav system or a Cobalt with OnStar? Whenever I read a media review, OnStar might be mentioned, but it's not described as a strong selling point of the vehicle. I don't think it's a feature that's going to cause many to pass the Toyota dealership on their way to a GM franchise. I've had it on my Aurora which I didn't renew. I have it on my VUE which will expire in December. I highly doubt that I'll renew it this time either. I suppose if I was in sales putting 30-40 thousand miles/year in my car, I might consider it. I occassionally use the minutes that I purchased at a deep discount, but frankly, I don't think I'd pay retail for those minutes - they're crazy expensive. I'm a little surprised that there's a 65% retention rate at the current price points - if true, then obviously a lot of other people see more value in the service than I do. If you think of it as insurance, by most standards, you'd have to say it's pretty expensive. For example - if I consider it insurance against locking my keys in the car and saving that expense, what are the odds that will happen?

[lightbrotha2004]

It saddens me to see all the people agaisnt OnStar. Its cheap insurence to have and frankly i wouldn't mind having it retrofitted to my Chrysler. Our GMC has it and we will not be letting it be lasped anytime soon, my father is currently looking to see if there is anyway he can have it installed on our Montana minivan he loves it so much. I'd rather have OnStar than in dash nav because they can tell you if there is construction and what not and offer an alternate route right away if neccessary. Just my two cent.

[jlmartin99]

Originally Posted by Shotgun

Despite what GM claims, no one I know opted to renew OnStar on their new vehicles. However. I agree with one poster's point...most people would opt for a DVD navigation. I think this is the better route for GM to go. I'd like to know if most of the retention is from business owned vehicles?

Greetings Shotgun,

I am one such customer of Onstar. I would not buy a vehicle without Onstar, at least for base safety features. I have subscribed for Directions and Connections for both of my cars. Most of my friends and family that have Onstar are subscribers as well, though most choose the base safety plan.

JLM

[saturnv1]

For all the folks who keep bashing the OnStar Turn-by-turn. You should try it first. Besides the voice directions, the street names and distances are shown on the radio display. i.e. Smith street. Then display shows the mileage until your next turn i.e. 32.1 miles. This in turn counts down as you drive until you hit 1 mile, it then displays yards. The system then chimes twice to let you know when to turn. It unlike ALL other nav systems can also be reprogramed on the fly. This system is not as unsophisticated as those who wish to undermine enthusiasm for GM products and services, would lead you to believe. No it is not a "James Bond" map display but it is far more useful for everyday driving.