The GM Authority newsletter reports that General Motors has “drastically” reduced the complimentary trial period of all OnStar services to a single month. As of July, the trial periods for automatic crash response, emergency services, roadside assistance, remote vehicle access (via smartphone apps), vehicle diagnostics, dealer maintenance notification, “Smart Driver,” and “Marketplace” will all be 30 days in length.

Conversely, GM has expanded the "free trials" for its service scheduling notification, usage-based insurance app (Smart Driver) and Marketplace - an in-vehicle monetization platform for marketing offers and discounts.

The decision reflects a shift in emphasis - underway for the past three years - to wring revenue out of OnStar. For GM the shift is a turn in the wrong direction for a variety of reasons. Let’s consider those reasons:

Missed Opportunity

The OnStar brand is one of the most recognized and therefore powerful brands in the automotive industry – on a par with LoJack. Unfortunately for GM, most of the value propositions of OnStar have been erased by smartphones.

Few car owners (i.e. potential OnStar subscribers) believe they will ever be in a car crash.  Even fewer expect their car to be stolen.  OnStar has been in need of a repositioning for many years and had the opportunity with the onset of the Maven car sharing service. GM could have repositioned OnStar as a mobility service – while retaining its existing value proposition.

GM chose, instead, to marginalize the OnStar brand – years ago renaming the division Global Connected Consumer Experience (GCCX) – and introducing the new Maven brand.  Maven shared customer support functions with OnStar, but the system used its own hardware and infrastructure.

Maven’s failure (now only available in two cities) flowed from this flawed branding strategy and an inability or disinclination to adequately saturate targeted cities with available vehicles.  Maven’s failure also sank any hope of leveraging the OnStar brand as part of a wider mobility strategy.

Missing the Big Picture

For some reason GM continues to perceive OnStar as a B2C offering when the reality is that the B2C elements are a Trojan horse for the more powerful B2B proposition of service scheduling, insurance claims management, and related fleet management opportunities including cybersecurity and over-the-air software update propositions.  GM should be announcing discounts for vehicle subscriptions or eliminating the charges altogether not shortening free trial periods.

Shortening the free trial for the mobile remote access app, in particular, is a major disappointment for GM dealers. The mobile app is one area where customers have demonstrated interest in daily usage. It's also a potential point of dealer engagement.

One of the biggest challenges in convincing car buyers to add a subscription (for car connectivity) is the fact that most new cars simply don’t require much attention for the first year or two of ownership. As a result, most car owners don’t feed a need to monitor their car’s performance until systems start to fail or longer-term maintenance issues arise further down the road.

The bottom line is that the connection to the car has greater value to the car maker and the dealer than it does to the consumer.  Car makers are able to avoid hundreds of millions of dollars in warranty exposure by careful monitoring of vehicle diagnostic data.  Dealers are able to dial up thousands of dollars in service and preventive maintenance work with proper car connections.

But GM rakes in more than $1B in vehicle telematics subscription revenue and simply can’t resist the urge to monetize those connections – ignoring the indirect, brand-building value propositions.

Bad Timing or Good Timing

GM is making the shorter trial subscription decision just as it is deepening its engagement with data broker Wejo, in which GM has taken a 35% stake with a $25M investment.  In essence, GM is taking the risk of putting itself on a data diet just as it is turning on the data tap for Wejo to leverage.  That is an odd decision, for sure.

At the same time, though, GM may feel that with its Marketplace application – for in-vehicle transactions – from Xevo it has a winning application tantalizing enough to drive consumer demand and overcome subscription anxiety.  Sadly for GM, most vehicle users are solely interested in traffic, weather and parking information – not toggling through on-screen offers in their dashboards.  Even worse, paying for parking from the car is a non-starter, according to Strategy Analytics’ own research and the experience of competing car makers and service providers.

Connectivity is Expensive

There is no doubt that GM has invested hundreds of millions of dollars in OnStar.  OnStar’s power derives from the size of its subscriber base.  The intensity of the competition from smartphones and the likes of Google, Apple and Amazon would suggest that broadening rather than narrowing the subscriber pool would be the ideal path forward. Shortening free trial terms and conditions will not add to the user base.

GM’s Backdoor

With its clever SIM partitioning strategy GM is likely preserving its vehicle connections apart from the consumer-facing elements.  GM may preserve the provisioning of the wireless device in the car in order to capture vehicle diagnostic data and enable over-the-air software updates as well as to prevent or detect cyber attacks. Of course, those connections should only be preserved with customer consent.

GM failed to leverage prognostic solutions, but the opportunity remains to create a powerful insurance claims management platform. The first step in that process - creating an certified repairs network - remains a work in progress. There are real dollars at stake here, if GM can correct its course.

What is Car Connectivity?

The biggest problem that the program change highlights, though, is the lack of clarity around what a connected car is or what it means. From 2002 to 2006, OnStar was available on vehicles produced by Acura, Isuzu, Subaru and Volkswagen through a licensing agreement. Ultimately, GM decided that the OnStar value proposition was a core brand value and ought not to be shared with other brands.

The termination of OnStar licensing could be regarded as a sound decision by GM, but it marked a missed opportunity to define what wireless connectivity would be for all auto makers. As a result, consumers today are increasingly interested in vehicle connectivity, according to Strategy Analytics’ own research, but connectivity means different things to different people. And car makers and dealers face a daunting task in explaining and setting expectations around connectivity.

Connectivity Complexity

A glance at the range of OnStar-enabled services and related service subscriptions is an almost instant turnoff. The spreadsheet (above) suggests to the customer that even GM doesn’t know what connectivity is or should be in a world dominated by smartphones. Again, GM is missing an opportunity to simplify and capitalize in favor of a preference to monetize.

Autonomous Tech

Connectivity is implicated in Cadillac's Super Cruise enhanced cruise control function. With C-V2X and 5G on the horizon, now would be a good time to start shifting OnStar messaging toward active safety applications. To do so will require robust, reliable vehicle connections that are provisioned and designed to meet safety requirements. No sign of safety integration for OnStar. GM is doubling down on infotainment.

Takeaway

This is no way to “sell” connectivity to the customer.  OnStar should be an inherent value proposition of every GM vehicle with features and functions that “come with” and are easily understood by the customer.  It is almost offensive to the customer that he or she must PAY for automatic crash notification. There was a time 25 years ago, when Project Beacon (which became OnStar) was recognized internally at GM as a corporate obligation. At the most senior levels of the company GM felt a responsibility to be able to respond to car crashes in a timely, potentially life-saving manner.

A bold move for GM might have been to make automatic crash notification free, once and for all – and finally. But, no.

GM now appears to be more interested in cashing in on OnStar. Rather than a brilliant stroke that vaults GM into a new realm of high value customer retention, the subscription rollback is more likely to erode OnStar’s stagnating subscriber base and undermine the value of the brand. That’s a shame.