Subscriptions to OnStar, the automotive telematics communications system now installed in all new General Motors vehicles, are set to grow steadily during the next few years as renewal rates for the service push total subscribers to among GM car buyers to 7.9 million by the end of 2017, up from 5.1 million in 2010, according to new research from IHS iSuppli.
OnStar’s rise will mirror sales growth for GM as a whole. Sales of OnStar in GM cars will expand to 3.2 million systems sold by 2017, up from 2.1 million in 2010. Renewal rates for the service—which is offered one year for free on new GM vehicles—will climb into the 60 percent range in 2011 and remain there for the next few years.
“GM’s OnStar has proven the appeal of telematics services among consumers,” said Anna Buettner, analyst and regional manager for automotive electronics at IHS. “From automatic collision notification to stolen vehicle assistance, to on-board navigation, to remote door unlock, to mobile phone remote control, to destination download from Google/Mapquest, OnStar has delivered a suite of services that motorists like. OnStar will continue to add compelling services in the future, such as remote software upgrade of electronic control units (ECUs).”
Best Buy Bonus
While the subscriber growth forecast mentioned previously accounts for GM-related vehicles, the possibility for further expansion of OnStar is significant given the recent agreement made with Best Buy to sell and install the service in non-GM vehicles.
As a partner in the program, Best Buy not only will sell the $299 OnStar module to anyone interested, it also will take part in installing and activating the system for users. OnStar says that its system should be compatible with 99 percent of the top-selling non-GM vehicles made during the last decade, opening up huge potential for more sales of the service.
It remains unclear if Best Buy will provide lifetime warranties on all its installations and how that will mesh with OnStar’s support.
As a result of increased competition in the North American market from Ford’s Sync, GM has finally added Bluetooth to the OnStar system. While OnStar now has a higher installation rate of Bluetooth systems compared to that of Ford and several other OEMs, Ford continues to have a more advanced Bluetooth technology.
IHS believes that many customers prefer to use a cell phone-based telematics service because the contract normally has a lower per-minute rate than one that comes equipped in the OEM-supplied embedded phone. As a result, GM is projecting it will sell 2 million-plus Bluetooth systems with OnStar in 2010, as well as more Bluetooth units than will Sync.
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