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OnStar's New Leader Should Try a New Approach

OnStar
OnStar

Once again GM is trying to make its in-car communication system OnStar into a popular feature car buyers will demand. Its former CEO Chris Preuss has stepped down and will be replaced by Linda Marshall, a communications industry veteran who recently joined GM. Her job, turn OnStar into a "difference maker" with GM buyers and owners.

I have no idea what Marshall will ultimately do, but here's an idea — drop the subscription plan from OnStar. Yes, I know the idea will be scoffed at by many in GM who see OnStar as a hidden gem with enormous profit potential. Heck, it's one topic CEO Dan Akerson brings up time and again.

While I see where they are coming from, I don't see huge numbers of car buyers signing up and paying $18.99 a month for OnStar once their initial six months of free service ends. Need proof? I've talked with GM employees, dealers, and long-time customers who have told me that once their free service ran out, they didn't sign up to be a monthly subscriber.

For better or worse, much of what OnStar offers is now available on our cell phones, and if you can get it, on your phone; so why pay monthly for OnStar? The most notable exception being OnStar automatically calling 911 if you are in an accident. That's why GM should drop OnStar's subscription plan and offer the service for 5 or 6 years through a "one time" fee people pay when they buy the car. Rolling in another $400 or $500 into a new car loan is something many people will gladly do for the "peace of mind" OnStar offers if you are in an accident.

Making OnStar service standard in every GM car for five or six years would not only boost new car transaction prices but also help OnStar better compete with Ford's popular Syncand MyFord Touch systems. Those systems (standard on some Ford and Lincoln models, or an option sold for $399) are popular because they incorporate your phone, iPod, etc. and they are not dependent on monthly subscriptions.

OnStar has enormous potential, but it needs to adapt to the times. Eliminating the monthly fee would give GM a tech/communications feature other auto makers can't match as a standard feature.

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