General Motors is reportedly making OnStar standard equipment for all new Buick, Cadillac, and GMC models. However, it’s also been alleged that the company will be forcing customers of those brands into a three-year subscription for the “Connected Services Premium Plan” that’ll cost roughly $1,500 and represent the latest example of how automakers are leveraging subscription fees to improve their overall profitability.
OnStar originated in 1996 as a collaboration between GM, Electronic Data Systems, and the Hughes Electronics Corporation. While primarily marketed as a way to notify police and rescue services in the event of an emergency, the system likewise featured vehicle tracking designed to locate car thieves in real-time. But it’s gradually been built up to incorporate the ability to remotely slow vehicles that have been reported as stolen and offers an array of connected services tied to various subscription packages. These can include Wi-Fi hot spots, video/audio streaming services, additional keyless entry options (using a phone app), integration of Amazon’s Alexa into the vehicle, enhanced GPS navigation, on-demand vehicle diagnostics, roadside assistance, automatic crash notifications when a driver has been incapacitated, and plenty more.
Customers even have the option to share their driving data with insurance agencies to get discounted rates. However, this has opened the service to some criticism as it’s previously been reported that OnStar is likely susceptible to remote activation by malicious third parties or government agencies. The company also stated in 2011 that it would begin retaining all the data collected by the GPS and internal data logging systems so it could be sold off. While the information was said to be anonymized prior to being delivered to any third parties, privacy advocate groups questioned how that would be possible and bemoaned the fact that OnStar would even consider selling the private information of paying customers. The mounting pressure encouraged the business to change its mind on the issue. But testing has shown that the system still tracked the relevant data and a surprising amount of other information (e.g. calling history) as of 2019.
That last bit is of key relevance, as General Motors seems to have uncovered a new way of profiting off the service — forcing people to buy it.
Last year, GM told investors that software subscriptions would become an $80-billion industry in the near future and followed up in 2021 by suggesting some of its customers could soon be spending $135 a month for various subscriptions it planned on adding in addition to their monthly car payment.
But this isn’t something that’s exclusive to the American automaker. German manufacturers have been ahead of the curve when it comes to subscription fees (though Tesla and GM aren’t far behind) and the whole industry has been on a quest to find the best ways to maximize margins using connected services for years now.
By forcing customers to pay for an OnStar system that’s already been equipped to their cars, whether they use it or not, General Motors has effectively found a sly way to raise the price of all vehicles by $1,500 without announcing a sizable price hike for each individual model. Pricing increases have become brutally common due to supply chain disruptions and record levels of inflation. Though it’s hard to feel any sympathy for most brands when the whole industry still can’t seem to manage ongoing component problems, has been enjoying healthy profits despite the diminished output, and will be getting massive EV subsidies from the same governments that devalued currency via unfettered spending. Meanwhile, a lot of brands and suppliers are prepping for sizable layoffs as they won’t need as many employees after transitioning to all-electric fleets.
It seems like a snake eating its own tail from my vantage. But nobody wants to report quarterly losses as the economy continues to curdle, so businesses are desperate to find ways of raising prices that won’t totally enrage cash-strapped customers.
A GMC spokesperson told the Detroit Free Press, which first broke the story, that the company decided to make the connected services standard because it would be “more convenient for our customers and provides a more seamless on-boarding experience.”
You may have already paid for the service without even realizing it. Since June 2nd, all new Buick and GMC vehicles sold in the U.S. have included three years of OnStar’s Connected Services Premium Plan under options & pricing for $1,500. Though it’s not actually an option since the subscription is baked into the MSRP. Cadillac similarly started including it on certain vehicles as of June 18th, starting with the Escalade.
So, what are customers getting for the money? Well, the formerly free items (e.g. vehicle diagnostics, dealer maintenance notifications, and GM’s in-car marketplace) haven’t gone anywhere and the Premium Plan adds Wi-Fi, automatic crash response, roadside assistance, turn-by-turn navigation, remote keyless features, and more.
If those things sound good to you, then there’s probably little about the price hike that grinds your gears. But, if you like your vehicles to be a little less nosy or feel like your phone offers all the connectivity you need, then you might find the additional fees more than a little unsavory.
[Image: General Motors]
Become a TTAC insider. Get the latest news, features, TTAC takes, and everything else that gets to the truth about cars first by subscribing to our newsletter.