Has the telematics business flopped in Europe?
Not at all. It is true that a few years ago we too - because of the new-economy hype - expected huge sales that never occurred. We have repositioned our business since and we realized that profit cannot be our priority.
So what is your priority?
Commitment to customers and vehicles is what is really important for telematics. This enables us to contact our customers in their cars at any time and on a regular basis. We can offer them additional services, lead them to our dealers, read out vehicle data and analyze it, which helps us avoid recalls and optimize warranty costs.
What services do you offer?
Since June 2004 we have been offering a package that is unique in its depth and price - just 1,490 for the hardware. This includes off-board navigation, a commuter service, which we offer in cooperation with the [German state] government of Hessen, an electronic logbook and a breakdown service including telediagnosis. In addition, we offer access to our mobility portal, which means contact to either a virtual or real OnStar advisor at a reasonable price.
How high is the demand for your products really?
Each month we receive around 5,000 inquiries at our call center, where we have 10 employees working 24 hours a day in three shifts.
How about the hardware?
Since 1999 we have sold 140,000 radio-integrated telephones that make OnStar services possible.
What is your goal?
We hope to achieve a penetration rate of 15 to 20 percent in every model series. This is the equivalent to a total of approximately 30,000 OnStar units a year. We hope to sell more than a million units by the end of the decade, but this is a very vague forecast.
How many units do you need to sell to make a profit?
Currently we are more like a cost center than a profit center. We believe that our primary task is to help improve the image of GM's brand in Europe. We will reach the profit zone once we have a higher volume. We need to sell between 350,000 and 500,000 units in Europe to achieve this.
OnStar is only available in Germany and the United States. Are you thinking of expanding?
It is not easy to extend such a complex IT infrastructure to other countries because of we need to consider national specific customer demands. We only offer the tracking of stolen cars in the United States for example as German customers have good insurance and usually don't want to have back a car once it has been stolen. Nonetheless, we are planning to enter Great Britain in 2006 and to then slowly expand to other big markets.
So far you are only offering your service for Opel vehicles in Germany. Are you planning to extend it to other GM brands?
We are working on integrating the system into Saab models starting in 2006.
Is Daewoo/Chevrolet included in the expansion?
OnStar is the telematics service provider for all GM brands. Daewoo customers, who primarily drive town and family cars, have a need for telematics services, which increase the value of a car, such as the SOS service call or the breakdown recovery service. I believe that starting in 2006 this has a realistic chance. By then, we should have a cheaper hardware unit costing around 100 euros. We are also aiming for an affordable basic telematics unit that should cost customers no more than 150 euros.
Your competitors are also upgrading their cars. VW recently started a cooperation with Infineon and Fiat with Microsoft. Does this worry you?
On the contrary. The more providers and services there are the better because that stimulates need. Pioneers are always in a difficult position. Telematics now has a new momentum. The interactive car is no longer just a futuristic vision.