OnStar Sets Spring Debut for Aftermarket Version of Full-Featured Safety and Security Service

LAS VEGAS -- When it emerged from bankruptcy last year, General Motors made it clear that it expected its OnStar subsidiary to play a major role in the company’s revival by “extracting value” from OnStar technology and the brand, OnStar President Chris Preuss told a news conference at CES. OnStar responded with what Preuss called Tuesday a “bold and transformational move” to take the safety, navigation and communications service to the aftermarket in 2011 over the Verizon Wireless network.

That opens up the OnStar service, which Preuss said has brand recognition of 65 percent among U.S. consumers, to non-GM owners and the used-car market for the first time. Original OnStar customers can upgrade to OnStar Anywhere for access to turn-by-turn navigation, Preuss said, but the company is still working out pricing. The move is part of a long-term strategy to add features, integrate seamlessly with “infotainment features” in cars, and raise data rates inside vehicles, Preuss said. Called OnStar Anywhere, the extended service opens an “evolving story of more opportunities to move into more telematic verticals where safety, security and mobility will be key,” he said.

OnStar is incorporating the system into a familiar form, a rear-view mirror, which will sport colored buttons for access to standard OnStar services. The mirror’s MSRP is $299, “the top end of the personal navigation device market,” Preuss said. Service plans are $199 a year or $18.95 a month, the same as for the OEM service. Through the current OnStar program “we were talking to 2-3 million people a year,” he said. “Now we're going to be talking to a much bigger audience.” He wouldn’t provide first-year projections for aftermarket sales.

Best Buy is the “preferred retail partner” for the OnStar mirror, but Preuss said it would also be available through 12-volt and independent mobile aftermarket dealers. The company is also talking with car dealers about installation opportunities, he said. The mirror can be retrofitted into about “99 percent of vehicles,” Preuss said, saying the company looked at the top 20 sellers in the market, accounting for “over 55 million units of opportunity for us.” He called proper installation “critical” to operation of the device’s safety features.

Preuss showed the system to journalists on a 2004 Toyota Camry. He said about 1 percent of cars built after 1990 don’t allow a proper installation because of line-of-sight issues with the GPS. Others, using a “headliner suspended mirror arrangement,” require special installation work, he said. All OnStar features are available in the aftermarket: Emergency crash response, hands-free calling, Bluetooth integration, turn-by-turn directions and the “Blue Button” connecting subscribers to OnStar.

Preuss told us the company has for years been stuck at a 50 percent conversion rate. That’s similar to the rate for XM Sirius subscriptions after free trials, he said. Aftermarket OnStar will have “big implications” for the company’s position in the market and its growth, he said.

OnStar has 6 million customers after 15 years in the market, Preuss said. OnStar Anywhere is the beginning of a move beyond core automotive to meet additional customer needs. New efforts will be coming from OnStar on the OEM side at GM “and how we're going to treat this consumer electronics market, particularly as we expand globally,” Preuss said. He sees the expansion as an assertive competitive step. “Everybody’s going to embed telematics in their vehicles,” he said. Competitors including Hughes are trying to enter the space, and phone apps present a threat with accelerometers that offer “some level of value,” he said. “We could let somebody else have that opportunity or we could go after it.”