Honda Deploys OnStar In-Vehicle Information System

SAN MATEO (05/23/2000) - Beginning in 2002, selected Honda and Acura model cars will come equipped with General Motors Corp.'s OnStar technology, the automakers announced on Tuesday.

OnStar, a wholly owned GM subsidiary, connects drivers in need of roadside assistance wirelessly to service centers around the country. The OnStar service will soon provide voice-activated Internet access, and OnStar also is partnering with content providers for additional e-commerce services. American Honda Motor Co. Ltd also will offer these OnStar capabilities, starting with the Acura RL luxury sedan in the 2002 model year.

GM's telematics technology is well in advance of that of most other automakers and figured significantly in Honda's decision not to develop its own in-vehicle system, according to a Honda representative.

GM's forthcoming digital radio network, called the XM Satellite Radio, will also be incorporated into Honda's cars when it becomes available later this year. The XM network will be subscriber-based like cable television and will offer national radio channels, which will accessible via satellite radio receivers installed in the car.

Programming will include various music genres as well as talk show programs, all with little or no advertising. The satellite system will be eventually integrated into the OnStar system for two-way communications: For example, drivers will be able to simply push a Buy button to order the CD they are listening to.

The GM-Honda deal is a classic example of one company taking its successful business model and repackaging it to other companies.

The key to reselling the OnStar technology will be to make sure companies such as Honda "own" the customer so as not to dilute the brand, said Adam J. Weiner, an analyst at Gomez Advisors, in Lincoln, Massachusetts.

"When you operate the OnStar system, the response center identifies you and the vehicle you're driving. The response would be customized to the operator of that vehicle," a Honda representative said.

The benefits to GM go well beyond incremental business.

"Unlike [that of] dot-coms, GM's value is based on its earnings; so, if it can boost its earnings with better margins, it will be looked upon more favorably with investors," Weiner said.

GM and Honda have a business relationship going back to last year when the automakers announced plans for GM to supply Honda with diesel engines for the European market while Honda will supply GM with an engine and transmission for a vehicle currently in development at General Motors.

General Motors Corp., in Dearborn, Michigan, is at www.gm.com. American Honda Motor Co. Ltd, in Torrance, California, is at www.honda.com.

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