GM Offers Buy-Lease Deal to Tuned-Out OnStar Subscribers

Despite vows from a top General Motors Corp. executive not to “walk away” from customers impacted by next year's shift from analog to digital signals, OnStar says it's unable to provide a technical solution for 500,000 subscribers left stranded with outdated technology.

While 1.5 million OnStar-equipped vehicles can and are being fixed with a digital upgrade, the half million vehicles in the U.S. and Canada with analog-only systems cannot be upgraded.

OnStar has issued an apology to those customers and is extending them a free 1-year subscription to the roadside/emergency service if they buy or lease a new GM vehicle or a used '06 model. The offer is in addition to the free 1-year subscription to OnStar, which is standard on most new GM models.

The issue highlights the challenge confronting auto makers when telecommunications infrastructure or market forces render on-board electronics obsolete faster than the cars and trucks on which they are featured. But it also is presenting a public-relations problem for GM.

When Ward's reported on the issue in November, GM North America President Troy Clarke said, “We're not going to walk away from those 500,000 loyal OnStar users.” But some dealers suggest the auto maker is not doing enough.

Most GM vehicles produced before 2002, in addition to some '02-'04 models equipped with OnStar, are affected. OnStar claims 4.5 million subscribers in the U.S. and Canada.

Its main partner, Verizon Wireless, will disable its analog networks on Jan. 1, 2008.

Dealers such as Wayne Massey of Massey Cadillac in Garland, TX, are installing the fixes and fielding some customer complaints. “There's not really an answer for them,” he says of such customers. “They've been used to (OnStar) for so many years.”

Massey is optimistic the GM offer will appease customers. But he doesn't sound confident. “Hopefully it'll sell cars,” he says. “But is that the best way to sell cars? I don't know.”

Other dealers report they're keeping pace with the fixes, but it not without some problems coordinating with OnStar and GM's service and parts operations.

“Not everybody is on the same page,” Juan Santos, service director at Williamson Cadillac in Miami, says. “We want to satisfy customers, but we're being bounced around from vendor to vendor, to no avail.”

The Florida dealership is providing upgrades on about two vehicles a day and has encountered only two vehicles ineligible for the new hardware.

“We've had two issues where customers have been a little bit upset that they're forced to buy a new car,” Santos says, noting the dealership was not able to entice the owners into a new vehicle.

GM launched its OnStar subsidiary in 1996 on an analog network run by Verizon. The FCC's decision came down at the start of the '03 model year. Critics claim the telematics provider should have warned customers the analog-based technology would soon be outdated.

But at the time, there was no solution for delivering telematics via digital cellular technology, Bill Ball, OnStar vice president for public policy, says. “At the time we did this, analog provided the best possible coverage,” he tells Ward's.

There was “an inability to provide a customer any real clarity about what the future of the regulatory policy of the FCC was going to be,” Ball adds. “I think our decision made good sense.”

OnStar began adding its dual analog/digital technology in '04 vehicles and increased distribution of the system in '05 models. Now, most '06 and all '07 OnStar-equipped vehicles have digital systems.

Ball says he does not anticipate any other systematic disruptions on the horizon.

“The analog situation was the result of an evolution of technology,” he says. “Right now it's not apparent there's an evolution that would create similar kinds of problems.”

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