GM pitches "smart" cars to cut back on discounts

DETROIT September 13, 2005; Reuters reported that General Motors Corp. trying to wean itself off huge discounts to draw customers into showrooms, is pitching the idea that its vehicles are "smart" enough to tell you how they're doing.

Under the strategy, outlined at a news conference on Tuesday, GM said it would perform hundreds of diagnostic checks on vehicles equipped with its OnStar satellite-based communications system automatically every month.

Through the OnStar global positioning device and technology embedded in most GM vehicles since the 2004 model year, GM was already capable of performing diagnostic checks on vehicles by remote control, when their owners requested them.

Now, U.S. customers who sign up for OnStar Vehicle Diagnostics, which is free, will have a battery of tests done automatically and get an e-mail generated by their own vehicle roughly every 30 days, GM executives said.

They said the e-mails would include feedback on a car's engine, transmission, anti-lock brakes, air bags and other vital vehicle systems.

The e-mails will also include reminders about when a vehicle is due for oil changes or other scheduled service, when customers actually have to pay a visit their local dealership.

"It's all about safety, security, peace of mind," OnStar President Chet Huber told reporters. "People really value that the vehicle is smart enough to help them like this."

Huber and Mark LaNeve, GM's head of marketing and sales for North America, both said the service was expected to boost customer appreciation of OnStar, which GM will soon offer as standard equipment in all its vehicles.

It is also a clear bet that safety and enhanced vehicle content can sell. GM is trying to cut cash rebates and other consumer incentives, which have squeezed its profit margins, as it rolls out new vehicles for the 2006 model year.

"This will be one more vehicle differentiating characteristic," said Huber.

OnStar's features include automatic alerting of emergency services when air bags are deployed, the ability to assist authorities in locating stolen vehicles, and remote unlocking of doors when keys are left inside.

OnStar is offered free of charge to GM's retail car buyers for the first year, and costs $199 a year after that. GM says about 65 percent of its customers opt to keep the service.