The owners of new General Motors vehicles will increasingly have the opportunity of reaching the world via the car’s built-in mobile broadband system – with the feature ultimately increasing the automaker’s profits.
Usually the business for an automaker is what military aviators would call “fire and forget” – they have missiles that once sent to target go about their (ugly) business without human intervention. This was the business case for decades for the carmakers – they sold the new vehicle and then moved on to the next customer and delivery. Today, look in the increasingly digital landscape things are different – one of the examples being the availability of in-car Internet. In the case of GM’s system, every time the user would make a query – for example book hotel rooms, seek deals on driver insurance or conduct a wide variety of other financial transactions – the carmaker would also get a small percentage fee from the service provider. The largest US automaker and the third biggest in the world started offering the high-speed wireless Internet connection (4G LTE) in certain models back in 2014, but the company didn’t say how it would come to monetize the technology to recuperate the introduction costs.
Now, the automaker is ready to equip the majority of 2016 model year vehicles with the feature, and the company is also detailing how it intends to profit from its implementation – showing a piece of the internal digital business strategy. Over the next three years, the OnStar 4G systems are forecasted to bring in more than $350 million. The range of profit generators from in-car broadband connections is still being under development, but the possibilities are numerous already: they can have a portion of e-commerce transactions, the carmaker could save billions in repair costs by using the connection and software updates to fix certain flaws and later on the driver could, for example, have his favorite drink or food prepared in advance in the favorite locale when the car sees it in the vicinity.