GM Pivots to Subscriptions Making 70% Profit Margins on Software
Buying a physical car was apparently too mid for GM, so the Detroit giant quietly turned its fleet into rolling monthly billers with fat profit margins.
Traditional car sales yield a depressing 4% to 10% profit per dollar, but software and digital services bring in a whopping 70% profit margin. Because electric vehicles need fewer oil changes and mechanical fixes, legacy automakers like GM are scrambling to squeeze post-purchase cash straight out of drivers' wallets.
The strategy is paying off massively through services like OnStar, which pulled in roughly $800 million in a single quarter while eyeing 13 million active subscribers. Meanwhile, the hands-free driving feature Super Cruise racked up 70,000 new paying users over three months, with monthly fees set at $40 after the initial free period ends.
This pay-to-drive trend isn't just happening in Detroit. Tesla recently scrapped its $8,000 upfront driver-assist package in favor of a $100 monthly subscription, while Ford charges $50 a month for its BlueCruise system. Even European heavyweights like Mercedes-Benz and BMW are locking behind-the-wheel options behind recurring credit card swipes.
The era of owning a vehicle outright is quietly dissolving into software licenses and recurring invoices. Car manufacturers are officially turning into telecom operators on wheels, where taking a highway trip might soon require checking if the premium steering package renewed this morning.
Source: Business Insider
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