May 26, 2009

OnStar Generates $1B+ for GM, Says iSuppli

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DETROIT – General Motors' OnStar service has earned the automaker more than $1 billion in annual revenues from subscriber services from an estimated 6 million active subscribers, according to iSuppli estimates.

GM has sold more than 16 million vehicles with OnStar control units since the inception of the service more than 10 years ago, according to iSuppli.

"For every $100 saved on warranty and recall costs, the value gained to GM increases by $250 million," said Phil Magney, vice president of iSuppli Automotive Research at iSuppli. "It is feasible that cost savings from telematics and other internal efficiency gains could potentially go much higher."

Now bundled as standard equipment, sales of OnStar-enabled vehicles in 2009 will amount to 2.5 million, down from nearly 3 million last year as overall sales of GM cars decline due to the overall drop in car sales, iSuppli estimates.

iSuppli predicts overall OnStar revenues will be flat during the next few years. While OnStar is seeing an increase in Average Revenue Per User (ARPU) due to improvements in its service, the volume on GM vehicles is being hurt by the current auto market.

As a point of reference, iSuppli has recently conducted in depth research on telematics hardware and services, including a recent teardown analysis of the latest OnStar Telematics Control Unit (TCU).

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