General Motors (GM)’s big bet is panicking 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 move to phase out smartphone-like software like Apple CarPlay in its future electric cars has some dealers baffled. This is because drivers really like to use Apple CarPlay when driving.
At Apple’s WWDC event last year, the company said that CarPlay was available on 98% of new cars sold last year, and that 79% of new car buyers He would only consider buying a CarPlay-compatible car. In addition, Consumer Reports found in a recent survey that 57% of respondents said they were “very satisfied” with CarPlaycompared to 50% less satisfaction with the automaker’s built-in system.
GM says it will instead introduce a new integrated infotainment system that takes advantage of Google’s built-in apps for cars (such as Maps, Assistant, and PlayStore), as well as apps like Spotify and Audible.
However, GM dealers are very concerned. Several merchants said Detroit Free Press They worry that new buyers will be looking out for automakers that plan to offer CarPlay indefinitely.
“CarPlay isn’t broken. Why fix it?” a source in close contact with several GM dealers told the newspaper. “The risk of failure is too high.”
GM says its new integrated infotainment system will debut in the 2024 Chevy Blazer EV, which will be released later this year.
“If we’re going to take that advantage from our cars, we need to respond with software and a customer package that’s just as compelling, if not more compelling,” Chief Financial Officer Paul Jacobson told Yahoo Finance earlier this year. “We believe that with the partnership that we have with Google, and ultimately with the vehicle data that we have, we can create an experience that customers will love.”
Carl Brauer, longtime industry analyst at iseecars.com, understands why GM made the decision to abandon CarPlay, but the move could prove costly.
“Like most corporate decisions, this one is revenue-driven in the hyper-subscription world we’re in right now. And like most hypersubscription decisions — I’m looking at you BMW and Ford — this one is going to backfire,” Brauer told Yahoo Finance. . “GM’s position is that its Google-based system is better than Apple CarPlay. If that’s true, they can continue to offer both CarPlay and Google with full confidence that consumers will choose the Google system…right?”
It appears that GM will not offer all three systems and see which one the user prefers, much to the chagrin of potential GM buyers and dealers. This is likely due to the bottom line.
GM aims to collect more of its own data to not only better understand drivers, but also to mobilize its profit margins in the long run. GM told investors this spring that it was looking to achieve profit margins of more than 20% on “new business” by 2030, which would presumably include services like its infotainment system that could charge for extra features.
This is nothing new in the auto industry — Tesla has been offering subscription services for years now. Dubb it the “Netflix Effect,” most automakers are looking forward to getting in on the game, too. GM’s crosstown rival Ford is looking to build a “software-defined vehicle” that can be easily upgraded over the air, while also having the ability to charge users for the extra features.
But the big difference here is that Ford CEO Jim Farley isn’t going to get rid of CarPlay. “70% of Ford customers in the US are Apple customers. Why would I go to an Apple customer and say ‘good luck’?” Farley said earlier this year. “It doesn’t sound customer-centric, and Apple is doing a really good job.”
However, companies chasing revenue streams like subscription fees will need to demonstrate that their offering is value-adding to customers, or at least as Farley says, being customer-centric.
“When consumers can’t see the value in a subscription fee right away, like charging for things that used to be free — like charging a BMW for CarPlay — or simply charging too much — like Ford raising the price of BlueCruse — consumers react,” Brauer said in a statement. iseecar.com. “And the backlash doesn’t reflect well on the company, and it often turns customers away.”
Pras Subramanian is a correspondent at Yahoo Finance. You can follow it Twitter and on Instagram.
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