GM CEO Mary Barra says providing software and services to initial, second, and third owners of GM vehicles is a major profit opportunity for the automaker.
Speaking at an investor conference on Friday, June 2nd, Mary Barra said she expects services to be more profitable than extra features such as heated seats, according to Automotive News reporting.
Mary Barra says GM has “done a lot of research in understanding what the consumer will pay for and what they won’t,” noting that customers will pay for “something that’s been invented that’s new, or a new service or a new feature.”
Barra went on to note that GM wants to continue offering services and collecting revenues during an extended “relationship” with successive owners of each vehicle. She pointed out the average passenger vehicle in the U.S. is currently more than 12 years old.
The automaker’s strategy will focus on offering ongoing software and services because “you want that first, second, third customer,” according to Barra, and the goal is “to own the relationship with the customer” in order to generate a long-term revenue stream beyond the initial sale of the vehicle.
The remarks by CEO Mary Barra mesh with previous statements from The General about its planned pursuit of continuing revenue from already sold vehicles. In early 2022, the automaker announced plans to roll out approximately 50 different digital subscription services by 2026 for in-vehicle conveniences such as online shopping.
These subscription-based services will likely include software-as-a-service (SaaS) applications. One example provided in a Detroit Free Press article was a weather-sensing program that would detect rain and roll up the windows automatically if they had been left open.
The larger infotainment screens implemented or planned for various GM vehicle models are intended to support SaaS and other subscription services, according to the same source. The services will be powered by The General’s new Ultifi platform.
Market research by Cox Automotive suggested only about 25 percent of car owners are willing to pay for subscription services, according to results published in April 2022.
About 92 percent of respondents were unwilling to make ongoing payments for heated and ventilated seats and 67 to 89 percent thought various emergency features should not be subscription services either. The results suggest automakers will need to pick and choose carefully which features and services are fully included in purchase price and which will be accepted as subscription-based.
However, as of August 2022, GM already expected software-as-a-service offered through Ultifi to generate $20 billion to $25 billion yearly by 2030. The company appears willing to hire experienced executives from places like Apple, such as newly appointed GM Executive Vice President of Software Tim Abbott, to make that happen, with Mary Barra stating in her remarks last week that GM is “bringing outside talent that has experience in that space.”
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Comments
Yawn!
And I rest my case Marry Bart’s is an idiot, and may I issue a warning to GM, already there is aftermarket heated seat modules, steering wheel modules/pop up headlights that integrate with the BCM’s of vehicles. If GM’s intention is to put heated seats and such features in every vehicle with the intention to sell at a loss and let the 2nd and 3rd customer pick up the costs, they will create a great incentive to break their ECU codes in the aftermarket. People don’t like high prices, but absolutely HATE when their being openly gouged. GM will loose millions and provide a nice tidy profit to the aftermarket if they persue this.
What Marry can’t seem to get in her head (despite being a financier) there is no legal way to get rich quick. You got to work for it, build a superior product, then a hardy brand, and once all that work has paid off, then you’ll reap the rewards.
As another Steve i would have to respectfully disagree with this (to a point). Aftermarket remote starts have been around for decades but we already know a very large number of people pay for an OnStar subscription just so they can have access to remote start on vehicles that don’t come equipped with it on the fob.
While i personally hate the idea of a subscription anything and don’t plan to subscribe to anything there is evidence that people don’t mind wasting their money.
As far as modifying the ECU to add the features you want, it’s not as simple as reflashing or adding a different module on the bus to talk to existing modules. Subscription features can be updated OTA and are also monitored OTA. Any manipulation can be turned around pretty quickly and easily.
If nothing else, this person is entertaining. Mary missed her true calling. She should have been a comedian. In her forty plus years at gm she has never been part of year over year market share gain. She and her management peers have lost more than 35% market share in forty years. Now, according to Barra she wants to own the relationship with the customer.
Good luck with her subscription services. She may have a built in audience with the morons that are buying her Chinese scrap she’s peddling in the U.S..
Maybe GM should focus on long-term vehicle quality before trying to hit up the 100,000+ mile used car buyer.
I have two GM vehicles currently in my driveway, bought new. A now 106,000 mile 2014 Buick Encore and a now 143,000 mile 2014 GMC Acadia. These are vehicles that have been well-maintained, always by the service schedule and often with preemptive preventative maintenance (extra fluid exchanges, etc.).
The Encore is basically toast. Needs new CATs, has an exhaust leak, turbo wheezing its last breath, has blown 3x head gaskets to-date (luckily under special coverage), has an oil pan leak, interior “chrome” trim is bubbling/peeling in places, car drives like $#!%. Also needed a new water pump at 90,000 miles amongst nother things. On a vehicle that always had synthetic oil, ran 93-octane gas for 75% of its life for the turbo, changed its “lifetime” ATF at 65,000 miles, new iridium plugs at 55,000 miles.
As for the Acadia, though mostly a solid vehicle, its had expensive AC repairs, eats stabilizer bushings, OEM suspension didn’t make it past 90,000 miles, can’t seem to get more than 50,000 miles out of the brakes. Biggest upcoming issue is the transmission, which I think is about to pop. This vehicle has been serviced on the “severe” schedule in the manual and then some based on prior model year histories. Extra ATF, DOT, PS flushes, etc.
The point I’m belaboring to make is: these vehicles have been babied above and beyond what a normal consumer would do — and they’re still falling apart or developing major and costly repairs. Yes, I know they are 10 years old, but when other end-users expect their Toyota, Honda, whatever to last 15 years and 200,000+ miles by basically changing the oil, GM has a problem. Always has.
I’ve owned these vehicles since new and they have been paid off for a LONG time now. I can deal with the problems if I so choose. Does GM really think that a second or third owner taking out a banknote to finance a used vehicle is going to have a lot of discretionary income for subscriptions when they probably already can’t afford the $1,500 AC repair? Or that $6,000 transmission? Or the numerous and varied $500-$1,000 charges?
GET. REAL.
Shilling for Toyota on a GM site makes you sound silly.
The key thing about picking a reliable car is knowing which power trains from each manufacturer are good. I have two chevys with the 3.6l v6. Both are wonderful, with 93k and 171k on each. The worst vehicle I ever owned was a 1986 Tercel I bought new with a 1.8l 4 cyl. Bad transmission that blew up at 105,0000 miles. 1986 was a time when Toyota WAS better, and I got a horrible one. I pick the car based on the reliability of the specific engine, not the manufacturer. Toyota 2.5 4 cyl are great. Their v6s are often have oil sludging issues which can destroy their engines early. They have lost numerous class action suits about this issue.
I don’t know anyone with a Toyota that hasn’t had issues with rust. Yes, they run forever, but if the body disintegrates that really doesn’t mean much.
LOL. I am glad you kept track of all Toyotas made, EVER. My neighbor has a 19 Rav-4 with rust at the bottom of the door. She must have gotten a “select” one.
Well I have 3 GMs and a Subaru in my driveway, all purchased new .
a 2011Cruze LTZ RS , a 2016 Colorado 4WD Z71 crew cab, a 2020 Equinox AWD midnight with 2.0l and a 2019 Subaru Forrester Sport
We live in the rust belt of Canada, and I do not own a garage so the vehicles set outside. All the GMs have been excellent todate. Also owned a 2019 Equinox premier AWD, 1.5l that has over 200k and is now the daily driver with another family member.
The GMs get excellent dealer maintenance, but we have not done anything outside of routine maintenance, oil changes , tire rotation, bake service etc with the following exceptions, New michelin tires on the Cruze and Colorado , and a new battery for the pickup. The paint and interior on all 3 is still in like new condition.
Now let me tell u about the Subaru , our 2017 Forrester at 125 k was becoming a money pit. It had electrical issues with lighting about 6 months in with all lights failing constantly , head lights , tail light and fog lights, the AC unit packed it in and needed a new compressor $2500, and finally as the car approached 2 years the Catalytic converter plugged and another $2500. So we got rid of it and got a 2019 Sport. It was 35,000k and we are now having malfunctions with the center stack HVAC and audio and the vinyl seats are splitting and cracking . This car gets the same great treatment at the local Subaru dealer.
I also drive a late model Toyota at work . It has 100k and its reliability and is no better than any domestic I have driven. Brakes , suspension and oil consumption to name a few issues.
While GMs are not bullet proof their reliability is as good as any Toyota / Honda in my experience.
We have many examples in the family of GM cars and trucks going 300k and more than 20 years with basically routine maintenance and wear items replaced. Is there room for improvement , absolutely , but so is there at Honda and Toyota. If GM quality is so poor why would Honda risk their reputation with having GM develop and build their first serious EV crossover?
@single maltscotch: what they are scrambling for is to replace the revenue of the repairs you call out. It will be easy to design a motor/reducer unit to last way longer than 200k miles. One of the biggest durability issues with ICE powertrains is that the combustion wears the drivetrain out- no way around that. Electric motors can be sealed so that debris is kept out in a way ICE engines cannot. If electric drives are as bad as ICE engines it will be due to value engineering the reliability out of the powertrain, like they commonly do now. I work with 700 hp synchronous motors installed in 1954 that run 24/ 7 without issues. We send them out for recondioning every 15 years or so.
I think the main reliability issues with electric powertrains will be what engineers call the “motor drives”- the electric devices that control the speed/torque/hp of the motor. If they get the motor designs right, the only real maintenance the car will need will be in the car’s suspension.
… or the fact that electric range decreases with age. A 12 year old battery with 75% of original range is a tough pill to swallow. Considering that replacing a battery is cost-prohibitive, electrics will be like cell phones — completely disposable.
Talk about more waste!
i like your idea, but that type of forever reliable car won’t make a car maker any good.
Why would someone change’s car, because they wear out.
Can a car keep running and you won’t need to change, no.
Toyota was very good at it, much more reliable cars that people are happy they are reliable.
If GM does the same, obviously, Mary’s game plan to attract new customer, but definitely, not subscription.
It’s like buying ground beef at a supermarket, without looking at the price, who does that?
Features and hardware should not be subscriptions. Services may be subscriptions. Please take notes automakers.
Wow. Such ignorance at the top of the food chain at GM. Yup, let’s do all this “research” to learn that we can bilk (or try to bilk) 2nd and 3rd owners on subscriptions. NOT GOING TO HAPPEN. I don’t care what the research says. Like someone above said, those types of buyers normally won’t be able to afford all this junk on top of cable, cell phone, internet and whatever other subscription bills they already have.
But here’s where I have the biggest issue. Quote from above “because “you want that first, second, third customer,” according to Barra, and the goal is “to own the relationship with the customer” in order to generate a long-term revenue stream beyond the initial sale of the vehicle.”
GM has basically followed Ford in wanting to only sell trucks and SUV’s. They have abandoned many car buyers. GM has pushed any lower priced “affordable” vehicles out and wants everything to be higher priced new. And they’ve decided to assemble too many vehicles in other countries. So here’s a thought Mary, if you really do care about those customers, try offering vehicles that people will buy a second, third or fourth time. Concentrate on your repeat and referrals. Stop chasing the clientele that will most likely never buy a GM anyhow. You’ve lost me and I was about as strong a GM guy as anyone would have found. So if they can’t keep me with their stupid moves, how do they think they will win over others?
It is interesting that people do not feel that emergency features and services should not be subscription based. When you look at something such as crash response, those require a manned call center with personnel. People see that something has occurred, immediately call the vehicle and ask the driver if they are okay [or try to get a response]. If needed, that person then calls emergency responders on the driver’s behalf. Yet, people don’t think this should be a subscription based service? Making this a subscription based service is the only way to pay for the personnel and infrastructure to offer this type of emergency service.
In the case of safety systems installed on cars such as lane keeping, automatic braking, or other hardware/sensor based systems then the argument is sound that those items should not be subscription based. Anything that is pre-installed on the car at purchase should be active on day one and remain active for the life of the car. Automakers shouldn’t be getting in to the business of selling cars at a loss and then “making it up” on monthly subscriptions. That model will not sustain itself for very long.
Tesla provides what you call the Onstar emergency for free. Not subscription.
Teslas aren’t cordless.
Let’s charge people a subscription fee to use the AC/Heating in their vehicle. Whoo hoo, we gonna be rich.
This is all part of the “you’ll own nothing and be happy” mantra. Heated seats are first, then come faster acceleration, then a fee to use a trailering package.
I can understand payment for services that require regular updates such as navigation, or music but not for something the car already has and requires no update.
Robotaxi is just a nursing home for drivers.
Lots of research and recent articles talking about consumers burning out on the whole subscription money grab model so many companies are embracing (aka “subscription fatigue”).
Leave it to GM to jump on the bandwagon just when consumers are struggling to stay ahead of the inflated prices of just about everything….especially vehicles.
If they start charging us for basic items we have today like heated seats and power windows then the GOV should step in and ban it for ALL AUTO companies as that is just complete BS as a way to make money because in the end if they are allowed to then its a market thing they will band together to do. Things like navigation we have at least alternatives to if we choose not to buy the service. i.e. Heated seats you can’t for direct comparison. Just unb4elievable they would try something like that.