by A big gamble by General Motors (GM) is causing consternation among its dealers in the all-important race to sell cars – namely electric vehicles.
As the auto industry gears up for its major electric transition, GM’s move to phase out smartphone-like software like Apple CarPlay in its future EVs has left some dealers baffled. That’s because drivers like to use Apple CarPlay while driving.
At Apple’s WWDC event last year, the company said that CarPlay was available in a whopping 98% of new cars sold last year, and that 79% of new car buyers alone would consider buying a vehicle. buy one that is compatible with CarPlay. Additionally, in a recent survey, Consumer Reports found that 57% of respondents were “very satisfied” with CarPlay, compared to 50% satisfaction with the automaker’s built-in system.
GM says it will instead offer a new integrated infotainment system that uses Google-built applications for cars (i.e. Maps, Assistant, PlayStore), in addition to apps like Spotify and Audible.
Nevertheless, GM dealers are very concerned. Several dealers told the Detroit Free Press they fear new buyers will seek out automakers who plan to offer CarPlay indefinitely.
“CarPlay isn’t broken. Why repair?” a source in close contact with several GM dealers told the newspaper. “The risk of failure is very high.”
GM says its new built-in infotainment system will debut in the 2024 Chevy Blazer EV, due later this year.
“If we’re going to take that feature out of our cars, we need to respond with a program and customer package that’s equally attractive, if not more attractive,” GM CFO Paul Jacobson told Yahoo Finance earlier this year. “We think with the partnership we have with Google, and ultimately with the vehicle data we have, we can create an experience that customers will love.”
Longtime industry analyst Karl Brauer of iseecars.com understands why GM made the decision to drop CarPlay, but the move could be costly.
“Like most business decisions, this one is driven by revenue in the hypersubscription world we live in today. And like most hypersubscription-based decisions — I’m looking at you BMW and Ford — this one will backfire,” Brauer told Yahoo Finance. “GM’s position is that the Google-based system is better than Apple CarPlay. If that’s true, they can continue to offer both CarPlay and the Google system with complete confidence that consumers will choose the Google system… right?”
It seems GM won’t be offering all three systems to see which one the user prefers, much to the chagrin of prospective GM buyers and dealers. And this is probably because of the bottom line.
GM aims to collect more of its own data to not only better understand its drivers, but also to increase its profit margins over the longer term. GM told investors this spring that it is looking for profit margins of more than 20% on “new businesses” by 2030, which would presumably include services like the infotainment system it can charge for add-on features.
This is nothing new in the auto industry – Tesla has been offering subscription services for years. Call it the “Netflix effect,” and most automakers want to get involved too. GM’s crosstown rival Ford wants to build a “software-defined vehicle” that can be easily updated over the air while having the ability to charge users for additional features.
But the big difference here is that Ford CEO Jim Farley won’t remove CarPlay. “70% of our Ford customers in the US are Apple customers. Why would I go up to an Apple customer and say ‘Good luck’?” Farley said earlier this year. “That doesn’t seem very customer-oriented, and Apple is doing a really good job.”
However, companies chasing revenue streams such as subscription fees will need to prove that their offerings add value to the customer, or at least, as Farley puts it, be customer oriented.
“If consumers can’t immediately see the value of subscription fees, such as charging for things that used to be free — like BMW charging for CarPlay — or simply overcharging — like Ford driving up the price of BlueCruse — consumers are responding,” said Brauer of iseecar.com. “And the response doesn’t reflect well on the company, often driving customers away.”
Pras Subramanian is a reporter for Yahoo Finance. You can follow him Twitter and further Instagram.
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