Breaking through the 20,000-subscriber-mark in China may seem like a negligible achievement compared with OnStar’s 5.5 million U.S. subscribers, but President Chris Preuss views it as a fast start in what could be the service's biggest overseas market.
Co. launched OnStar in China last December.
“We're growing extremely fast in China,” Preuss tells Ward's in a phone interview. “It's a challenge to keep up with the demand there.”
Preuss, a veteran GM public relations executive, took over as OnStar chief March 1.
Subscriptions in China cost a few dollars less per month than in the U.S., where the basic security package is about $19 per month. The full concierge package is about $29 per month.
Chinese subscribers have been enthusiastic about OnStar's services thus far, Preuss says. However, their tastes differ widely from those of U.S. subscribers, as Chinese customers value concierge and navigation aids more than safety and emergency features.
Turn-by-turn navigation use is four times higher in China (as a percentage of subscribers) than in the U.S., Preuss says. Chinese OnStar subscribers also desire more connectivity and other sophisticated services.
Another difference between the two countries is how accidents are handled. The Chinese are more apt to settle damage claims on the spot – in cash.
Unlike U.S. customers, “they don't want the police or other authorities involved,” Preuss says.
OnStar plans to offer service in Europe in the future, but Preuss says the rollout has been stymied due to differing cellular-service standards between countries.
“We're working on GSM (Global System for Mobile Communications) capability,” he says. “But there are a lot of financial challenges,” as well as challenges from competitors.
In addition, the European Union has proposed mandating eCall, an emergency calling system, by 2014. The system automatically dials 112 after a crash, but not all EU countries are supporters. France and the U.K. are among the holdouts.
“There's more cell-phone challenges traveling between countries in Europe,” Preuss notes.
GM has legacy OnStar contracts in existence with owners of some other vehicle brands and these continue to be honored, the executive says. However, GM has no plans to offer OnStar to additional car manufacturers.
“When I took over OnStar and discussed key (future) strategies with GM Chairman Ed Whitacre, we agreed that for competitive reasons we would keep it exclusive for our brands,” Preuss says.
He points to a survey in which more than 5% of GM customers say they bought their vehicle from the auto maker because of OnStar. Another 75% say the service was an important factor in their decision to purchase a GM vehicle.
OnStar’s current subscriber base is stable, and GM intends to do more marketing at the dealer level to increase subscriptions, Preuss says, adding more customers are signing up as subscribers after the free-trial period ends.
Additionally, OnStar currently is “very profitable,” Preuss says, noting the service employs a corporate staff of 500, plus another 2,000 working in its call centers.
“There's probably some growth capacity in our employment,” he adds, with one potential area being the use of agents who work out of their homes to provide around-the-clock customer service.