A big gamble by General Motors (GM) is causing consternation among its dealers in the all-important race to sell cars, namely electric vehicles.
As the auto industry prepares for its big electric transition, GM’s decision to phase out smartphone-like software like Apple CarPlay in its future electric vehicles has some dealerships puzzled. That’s because drivers really like using Apple CarPlay while driving.
At Apple’s WWDC event last year, the company said CarPlay was available in 98% of new cars sold last year, and that 79% of new car buyers would only consider buying. a vehicle compatible with CarPlay. Additionally, Consumer Reports revealed in a recent survey that 57% of respondents were “very satisfied” with CarPlay, compared to 50% satisfaction with the automaker’s integrated system.
GM says it will instead offer a new in-car infotainment system that leverages Google’s built-in apps for cars (eg, Maps, Assistant, PlayStore), in addition to apps like Spotify and Audible.
Nevertheless, GM dealers are very concerned. Several dealerships told the Detroit Free Press they fear new buyers will seek out automakers that plan to offer CarPlay indefinitely.
“CarPlay is not broken. Why fix it?” a source in close contact with several GM dealerships told the newspaper. “The risk of failure is very high.”
GM announces that its new integrated infotainment system will debut in the 2024 Chevy Blazer EV, which will be released later this year.
“If we want to remove this feature from our vehicles, we need to respond with a customer program and package that is just as compelling, if not more compelling,” GM chief financial officer Paul Jacobson told Yahoo Finance earlier this year. . “We believe that with the partnership we have with Google, and ultimately with the vehicle data we have, we can create an experience that customers will love.”
Longtime industry analyst Karl Brauer of iseecars.com understands why GM made the decision to drop CarPlay, but the decision could be costly.
“Like most business decisions, this one is driven by revenue in the hyper-subscription world we now occupy. And like most hyper-subscription-driven decisions – I’m looking at you BMW and Ford – this one will backfire,” Brauer told Yahoo Finance. “GM’s position is that its Google-based system is better than Apple CarPlay. If true, they can continue to offer both CarPlay and the Google system with confidence that consumers will choose the Google system…right? »
It looks like GM won’t offer all three systems and won’t see which one the user prefers, much to the chagrin of potential GM buyers and dealers. And it’s probably because of the bottom line.
GM aims to collect more of its own data not only to better understand drivers, but also to increase profit margins in the longer term. GM told investors this spring that it was looking to make profit margins of more than 20% on “new businesses” by 2030, which likely include services like its infotainment system that it could charge a fee. for additional features.
This isn’t new to the auto industry — Tesla has been offering subscription services for years now. Call it the “Netflix Effect,” and most automakers are also looking to get into the game. Ford, GM’s Crosstown rival, is looking to build a “software-defined vehicle” that can be easily updated. wireless, while having the ability to charge users for additional features.
But the big difference here is that Ford CEO Jim Farley won’t be getting rid of CarPlay. “70% of our Ford customers in the United States are Apple customers. Why would I go up to an Apple customer and say, ‘Good luck,’?” Farley said earlier this year. “That doesn’t sound very customer-centric and Apple is doing a really good job of it.”
However, companies looking for revenue streams like subscription fees will need to prove that their offerings add value to the customer, or at least, as Farley puts it, be customer-centric.
“When consumers can’t immediately see the value of a subscription, like charging for things that were free — like BMW charging for CarPlay — or just overcharging — like Ford raising the price of BlueCruse — consumers respond,” said Brauer from iseecar.com. “And the reaction doesn’t reflect the business well, often driving customers away.”
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on instagram.
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