General Motors' Software Subscription Business Shows Significant Growth
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 days ago
0mins
Should l Buy GM?
Source: NASDAQ.COM
- Revenue Growth: General Motors expects to generate $3.1 billion in revenue from OnStar and Super Cruise subscriptions in 2023, a significant increase from $1.7 billion in 2020, highlighting the company's potential in high-margin software business.
- Margin Improvement: GM's average gross margin over the past decade has been just over 16%, while software services typically boast margins close to 70%, indicating a promising outlook for the company's profitability.
- Long-Term Subscription Strategy: Starting in 2025, GM will offer an eight-year basic subscription to OnStar and three years for Super Cruise with new models, aiming to enhance customer renewal rates and mitigate subscription fatigue.
- Customer Upgrade Trends: Currently, about one-third of customers with basic OnStar subscriptions are opting for additional features, and at least 30% of expiring Super Cruise subscriptions are being renewed in 2025, demonstrating consumer acceptance and demand for these services.
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Analyst Views on GM
Wall Street analysts forecast GM stock price to rise
19 Analyst Rating
14 Buy
4 Hold
1 Sell
Moderate Buy
Current: 76.730
Low
57.00
Averages
95.06
High
122.00
Current: 76.730
Low
57.00
Averages
95.06
High
122.00
About GM
General Motors Company designs, builds and sells trucks, crossovers, cars and automobile parts and provides software-enabled services and subscriptions worldwide. The Company's segments include GMNA, GMI, Cruise and GM Financial. Its GM North America (GMNA) and GM International (GMI) develop, manufacture and/or markets vehicles under the Buick, Cadillac, Chevrolet and GMC brands. The Company provides automotive financing services through its General Motors Financial Company, Inc. (GM Financial) segment. Its Cruise segment is engaged in the development and commercialization of autonomous vehicle technology. Its software-enabled services and subscriptions, including OnStar, its advanced driver-assistance systems (ADAS), including Super Cruise driver assistance technology, and its end-to-end software platform. The Company is also focused on investing in electric vehicles (EVs) and AVs, software-enabled services and subscriptions and new business opportunities.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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