BOSTON (06/01/2000) - In a bid to drum up a new income stream, General Motors Corp. recently licensed its OnStar communications technology to rival Honda Motor Co.
GM will also provide services such as emergency roadside assistance to Honda customers.
Under the deal, Tokyo-based Honda will equip its 2002 Acura RL luxury sedans with the OnStar in-vehicle communications system and services. Financial details weren't disclosed, but officials said other Honda vehicles could be added to the licensing agreement.
Using Global Positioning System (GPS) and cellular technology combined with an around-the-clock service center, OnStar provides emergency roadside assistance, stolen-vehicle tracking and concierge services. The GM subsidiary also plans to offer other e-commerce services later this year.
Detroit-based GM hopes to groom OnStar into a major source of income. Chet Huber, OnStar's managing director, forecast OnStar's revenue to grow from US$61 million this year to $2.3 billion in 2005. Last year, the world's largest automaker posted income of $6 billion on revenue of $177 billion. But more than one quarter of GM's profits came from GM Acceptance Corp., its financial services wing, a sign of how important it is for GM to develop new revenue sources.
"GM built an infrastructure that can be used like an ISP and they can repurpose it for other services," said James McQuivey, an analyst at Forrester Research Inc. in Cambridge, Massachusetts.
Annual subscription fees for OnStar start at $199 for basic emergency services.
It costs $399 for additional travel and concierge services.
Ford Motor Co. in Dearborn, Michigan, and DaimlerChrysler AG in Stuttgart, Germany, have similar offerings.
Ford offers in-vehicle navigation and emergency communication services in Lincolns, Jaguars and Volvos and will offer services under the Lincoln Rescu service through Sprint PCS Group in Kansas City, Missouri later this year. But Ford hasn't decided on licensing to other manufacturers, said spokeswoman Fara Warner. DaimlerChrysler spokeswoman Ann Smith said the company has no plans to license the Tele-Aid roadside services and the Command navigation systems available in Mercedes-Benz vehicles, but added, "We would not rule [licensing] out."
Thilo Koslowski, an analyst at Gartner Group Inc. in Stamford, Connecticut, said putting cellular and Web services in vehicles fills a gap.
Koslowski said offering OnStar in more-expensive Acura vehicles was a good strategy, since consumers of lower-end vehicles, such as the Honda Civic, would be less likely to purchase the service.