6.3 Billion Reasons This Top Automaker Is Changing the Game
General Motors is showing how lucrative digital services can be and how much potential it has with its growth and retention rates -- and Ford Motor Company has similar potential.
Overview
The automotive industry has long been known for razor-thin margins, but that narrative is slowly changing as more subscription services and advanced software technology flood into vehicles. In fact, General Motors' (NYSE: GM) OnStar subscription services ended the second quarter with deferred revenue of $6.3 billion -- an almost 50% year-over-year increase. Those subscription sales come with far higher margins than its traditional automotive business, giving investors a new angle on an age-old industry and its potential.
Let's dig in and see how GM's digital strategy, as well as rival Ford Motor Company's (NYSE: F), could change the game for their investors.
Details
Rather than pushing sales of its OnStar and Super Cruise services to consumers at the point of purchase, General Motors is going about it in a different way. The automaker is bundling long-term prepaid OnStar and Super Cruise trials into new vehicle purchase prices. All 2025 and newer models include eight years of OnStar Basics, and select equipped models include three years of hands-free Super Cruise and associated connected services.
Source
Originally published at www.fool.com.