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General Motors Corp.'s Onstar in-car communications unit is seeing the growth of its subscriber base slowing as consumers don't renew at the end of their first year of service, but the unit still expects to continue expanding and is meeting its financial targets, an Onstar executive said. "There's a certain leveling out" in the growth rate, Don Butler, Onstar's vice president of commercial development, said in an interview. "It's well within what we had planned." "We think it's going to continue to grow, but I can't tell you at what rate," Mr. Butler said.
He said Onstar has more than 2 million subscribers now, but declined to comment on the renewal rate or other details. Earlier this year, GM officials said about 56% of subscribers renew the service after the first year, just short of the company's target of 60%.
Mr. Butler said Onstar "should be pretty close" to hitting a target of being available on 4 million vehicles by the end of next year, but noted that not all of those vehicles will have active subscriptions. "We won't be at 4 million subscribers," he said, declining to provide a forecast.
Two years ago, GM began a big push to expand Onstar, which combines a built-in cellular phone with global-positioning equipment to connect cars to operators at a service center who can provide emergency assistance, travel information and other services. Onstar also offers features like remote door unlocking and tracking of stolen cars, as well as voice-operated phone service and Internet access. Onstar charges $16.95 a month for basic emergency service, which accounts for about 80% of its subscribers, with packages including navigation assistance and concierge services costing $34.95 and $69.95 a month.
GM has included Onstar hardware and a one-year subscription to the basic service in popular option packages on many of its models, and offers it as a standalone option on some vehicles at a cost of $695. The service also is available on some vehicles from rivals, including Toyota Motor Corp. and Honda Motor Co. Volkswagen AG will be rolling it out across many of its Volkswagen and Audi vehicles in the next year, Butler said.
He said that Onstar, which had cut back on national television advertising this year, will resume ads in the next few months. While past campaigns used Batman to highlight the system's features, Mr. Butler said future campaigns will focus more clearly on testimonials from consumers about how Onstar helped them. One radio ad already running in the Northeast, for example, includes a replay of a conversation between a subscriber who had been in an accident and the Onstar operator who summoned emergency crews.
In August, Onstar said it responded to 650 automatic notifications that airbags had deployed, as well as another 4,000 emergencies. Mr. Butler said "the vast majority" of subscribers to the basic service have no contact with Onstar after registration for their first year trial period. To help increase the contact, Onstar is pushing its voice-operated-phone service, but Mr. Butler said only about 20% of subscribers buy airtime beyond the 30 minutes included with the subscription.
WALL STREET JOURNAL 10/23
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