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OnStar Generates More Than $1B: iSuppli

El Segundo, Calif. — While General Motors faces possible bankruptcy, its OnStar service is quite healthy, raking in $1 billion in business annually and creating a platform that saves the company millions in other ways, said iSuppli.

GM has sold more than 16 million vehicles with built-in OnStar since the service launched 10 years ago, and it has become the leader in telematics.

Apart from generating $1 billion in revenue, OnStar saves GM more than $100 million annually by wirelessly collecting information on its users’ vehicles, said iSuppli.

OnStar’s two-way service can collect readouts on its vehicles’ error codes. Some of the errors are fixable through software updates, which can avoid costly warranty repairs and even some product recalls, said iSuppli automotive research VP Phil Magney.

In the future, aftermarket car audio products will also capitalize on this trend in remote diagnostics, he said, noting that prototype portable GPS devices offering the ability to connect to a vehicle’s OBD-II diagnostic port to offer advanced features were recently shown in Korea by Hyundai Autonet.

iSuppli predicted GM will sell approximately 2.5 million OnStar-enabled vehicles in 2009, down from nearly 3 million in 2008, due to slower car sales.

Overall, OnStar revenues will be flat during the next few years, predicted iSuppli, although OnStar is seeing an increase in average revenue per user due to improvements in its service.

Other car companies that also offer telematics services include Mercedes-Benz, BMW, Toyota, Lexus, Acura, Ford and Lincoln, said iSuppli, although OnStar is considered the most advanced.