AUTOMOBILE

To drive its growth, GM sees more than cars

GM says it will double its annual revenue to about $280 billion by 2030 while expanding its profit margins to as high as 14 percent, but building and selling vehicles won’t be the primary driver of that growth. The company plans to develop software and technology designed to keep customers coming back, stretching a typical one-time vehicle transaction into recurring purchases. Within a decade, GM expects as much as $25 billion in annual revenue from software and subscription services.

But can GM pull all of that off? The software space is competitive, with the likes of Apple and Google already dominating the market. And if average transaction prices continue to climb, consumers may be unwilling or unable to pay additional subscription fees each month.

“The only way consumers will buy into this is if it’s more convenient and cheaper and a better experience than just using an app on their phone,” said Sam Abuelsamid, principal analyst at Guidehouse Insights. “As long as Apple CarPlay and Android Auto exist, this might be a very tough sell.”

GM executives are confident in the subscription strategy, in part because of the company’s 25-year-old OnStar in-vehicle safety and security business. OnStar has 4.2 million paying subscribers and will generate about $2 billion in revenue this year at a margin of more than 70 percent, GM said.

With its nationwide reach and high margins, OnStar is comparable to Netflix, Peloton and Spotify, said Alan Wexler, GM’s senior vice president of innovation and growth.

On average, customers will spend $135 a month on subscription services, according to GM’s research. GM plans to offer several features as subscriptions, including Super Cruise enhancements, in-vehicle personalization themes, over-the-air navigation and park assist. Commercial customers would be able to pay for insight on their vehicle fleets. GM projects that connected vehicles and other new businesses, such as BrightDrop commercial vans and OnStar Insurance, will produce more than $80 billion in annual revenue by 2030.


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