OnStar: Connecting to Customers Through Telematics

Case Solution

Peter Koudal, Hau Lee, Barchi Peleg, Paresh Rajwat, Seungjin Whang
Stanford Graduate School of Business ()

OnStar, a vehicle safety and information services provider called Telematics, was founded in 1995 as a joint venture between General Motors (GM), EDS and founded Hughes Electronics Corp.. Safety and security services, including roadside assistance, emergency assistance after an accident, remote diagnosis and stolen vehicle tracking, have been the cornerstone of OnStar’s offering. Additionally, OnStar offers customers a 24-hour connection to convenience services such as navigation and route guidance, vehicle location assistance, and personal concierge services. To drive more sales, OnStar has expanded its offering to luxury vehicles from other automakers. In retrospect, OnStar President Chet Huber has been very pleased with the company’s success since its inception: OnStar’s subscriber base had grown to more than 2 million and the company was routinely recognized as the leading telematics provider. in the world. OnStar also provided benefits to its parent company, GM. By maintaining personal relationships with customers, OnStar helped GM sell more cars and trucks, build customer loyalty, and improve operational efficiencies. Although the global automotive telematics terminal market was expected to generate sales of $ 20 billion by 2010, competition in the market intensified. Richard Wagoner, CEO of GM, and Huber had to investigate a number of strategic and operational questions surrounding the future of OnStar: How would OnStar create lasting value for GM? How should OnStar position itself to achieve high subscription renewal and adoption rates? What other strategic partnerships should OnStar form to maintain its leadership position? How should GM take advantage of the continuous stream of vehicle and customer data it receives from OnStar?

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