General Motors Company (GM) To Leverage In-Car Mobile Broadband Systems To Boost Revenue
General Motors Company (NYSE:GM) is working out a way to make its in-car connectivity usable for a wide range of transactions, including booking hotel rooms and making insurance payments. The company will be able to collect extra revenue by taking a cut from transactions done through its in-car platform. GM said it could tap nearly $300 million in new profits by 2018, through its 4G in-car system, but analysts say the company could make more money, at least $439 million in three years, through its digital offerings.
General Motors Company (NYSE:GM) is rolling out its OnStar 4G system to more cars, including some 2016 models. The aim is to enable drivers to make online transactions conveniently on the car dashboard. The company will be able to take a cut from sellers for sales made through its in-car system.
There isn’t a clear roadmap as to how General Motors Company (NYSE:GM) intends to make up for the cost of installing 4G LTE systems in its cars. Some investors have also worried whether the company is putting money on a losing bet. However, GM has moved to remove whatever doubt is still existing about its OnStar project, saying that the rollout of the system to more cars will lead to more than $300 million in new profits in the next three years.
More profits than guided
The company installed OnStar on some of its models last year and is moving to expand it to its 2016 U.S. models. Analysts believe that the potential of in-car connectivity is huge and still developing. According to Citigroup Inc (NYSE:C), GM’s OnStar is a potentially $9 billion business.
Another way to benefit
In addition to taking a cut from purchases made through in-car connectivity, General Motors Company (NYSE:GM) could also benefit from reduced auto repair costs, by pushing out software updates automatically.
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