Lexus Licenses GM's OnStar GPS Service

After years of quiet talks with General Motors Corp., Toyota Motor Corp. next week will unveil its 2001 Lexus luxury sedans equipped with its rival's OnStar in-vehicle communications service.

The licensing deal with Toyota puts GM solidly ahead of the automotive pack in developing in-vehicle Web and cellular communications systems. It should also help GM inch closer to its US$61 million year-end revenue target for OnStar sales. But the pact is expected to have little near-term impact on Toyota's Lexus sales in the U.S., Lexus dealers said.

GM launched OnStar, a satellite-based Global Positioning System (GPS) mapping and cellular calling service three years ago.

Aichi, Japan-based Toyota will begin shipping the 2001 Lexus LS 430 to its dealers on Thursday. The restyled vehicle has a suggested price tag of $54,000. GM's OnStar service, which Toyota has rebranded as Lexus Link, is available as a factory-installed option at a cost of $1,215.

Using Lexus Link, calls from drivers will be routed through GM's call centers and fielded by specially trained service representatives. The Lexus Link basic service package costs $215 per year and includes theft notification and roadside assistance. The premium package, priced at $413 annually, also includes concierge services and directions.

But Toyota is still test-driving the service. Lexus Link will be available as a factory-installed option on just 15% to 30% of the 25,000 LS 430s slated to roll off the production lines for the 2001 model year.

Next month, GM will begin a national rollout of its Virtual Advisor - a voice-activated Internet news, e-mail and cellular calling service - on 32 of its 54 vehicle lines, including Cadillac and Oldsmobile.

Toyota won't participate in those services.

Although Toyota executives anticipate a 93% increase in orders from the 14,000 Lexus LS 400s sold last year, dealers said Lexus Link will have a marginal sales impact, if any.

"[Lexus Link is] a nice feature, but I don't think people would not buy the vehicle because we did not have it," said Stefan Smith, president of Lexus of Memphis.

Smith said his dealership has already presold 70 LS 430s, 40% of which were fully equipped with the Lexus Link service.

"People who buy early want the whole shebang," he said.

Tom Rudnai, general manager at Longo Lexus in El Monte, Calif., said it's too early to determine if the service will have an impact on sales, given the timing of the announcement.

Officials at Detroit-based GM said more than 400,000 car owners have subscribed to the OnStar service since its inception. The Toyota deal and a similar pact reached in May with Tokyo-based Honda Motor Co. to offer the OnStar branded system in the 2002 Acura RL Sedan should help the world's largest automaker reach its OnStar revenue forecast of $61 million this year.

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