GM says it will double its annual revenue to around $ 280 billion by 2030 while increasing its profit margins by as much as 14%, but the construction and sale of vehicles will not be the main driver of this. growth. The company plans to develop software and technology designed to build customer loyalty, turning a typical single vehicle transaction into recurring purchases. Within a decade, GM expects up to $ 25 billion in annual revenue from software and subscription services.
But can GM pull it all off? The software space is competitive, with Apple and Google already dominating the market. And if average transaction prices continue to rise, consumers might not want or be able to pay additional subscription fees each month.
“The only way consumers can participate is if it’s more convenient and cheaper and a better experience than just using an app on their phone,” said Sam Abuelsamid, senior analyst at Guidehouse Insights. “As long as Apple CarPlay and Android Auto exist, this could be a very difficult sale.”
GM executives are confident in the subscription strategy, in part because of the company’s OnStar in-vehicle safety and security activities, which have been around for 25 years. OnStar has 4.2 million paying subscribers and will generate about $ 2 billion in revenue this year with a margin of over 70%, GM said.
With its national reach and high margins, OnStar is on par with Netflix, Peloton and Spotify, said Alan Wexler, GM’s senior vice president of innovation and growth.
On average, customers will spend $ 135 per month on subscription services, according to GM research. GM plans to offer several features in the form of subscriptions, including Super Cruise upgrades, in-car customization themes, live navigation and park assist. Commercial customers could pay for information on their vehicle fleets. GM’s projects that connected vehicles and other new businesses, like the BrightDrop commercial vans and OnStar Insurance, will generate more than $ 80 billion in annual revenue by 2030.