General Motors is struggling to keep OnStar alive. Though the product has been popular with consumers, the company is facing stiff competition from other manufacturers that offer many of the same or comparable services for free. GM, on the other hand, charges OnStar subscribers $200 to $300 a year.
Similar to the way in which homeowners get a home insurance discount for installing safety features such as alarms and fire detectors, GM is partnering with auto insurers to offer car insurance rate reductions to those who use OnStar for subscribing to that service. Actually, that philosophy makes sense, since OnStar can locate stolen cars quickly and call for help when there’s an accident, reducing emergency response time and, subsequently, saving insurance companies a lot of money.
So what—and who—is GM competing with in this market? Ford’s Sync system seems much more advanced than OnStar, with a smoother user interface, simpler Web connectivity and social interaction. OnStar, it seems, is playing catch-up in these areas. In addition, many smartphone apps and dash-top satellite navigational devices offer maps, directions, roadside assistance and other communications free of charge.
OnStar’s one advantage over its competitors: the ability to call for help in an accident, whether the driver is conscious or not. You can’t do that with a smartphone!
However, like everything, the issue simply boils down to cost. If OnStar is going to continue competing, it’s going to have to sweeten the pot, find ways to lure customers in, and convince them its product is worth the dough.
Thus come car insurance rate reductions, already begun by GMAC Insurance. This insurer uses odometer readings pulled directly from vehicles and based on miles driven, so the less customers drive, the bigger their discount.
GM hopes that other insurers, like Century 21 and Liberty Mutual, will soon join in and follow GMAC’s example. Meanwhile, let’s hope its competitors don’t swallow it up!