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How does this business decision make sense? A car is a high-margin item, so the impact of even a handful of consumers choosing not to buy must be huge, right?
by mlsu 4y ago
How does this business decision make sense?
A car is a high-margin item, so the impact of even a handful of consumers choosing not to buy must be huge, right? Whereas, they would need to "monetize" (ugh) many many more units to turn back that lost profit.
And as the shakeup due to EVs begins, even loyal consumers will be considering other makes. My girlfriend bought a car recently. CarPlay was not negotiable for her, very high up on the list.
What are they putting in the water over there GM?
- cced 4y agoProbably a joke of _poor taste_ but my guess is lead.
- maxerickson 4y agoThey may well be more or less production limited on the EVs (not saying that they are, pointing at the possibility). If it actually works good people might not care in the medium term. Generally the problem people have with the automaker systems is that they sucked, not that they weren't CarPlay.
- vineyardmike 4y agoYea except now that CarPlay exists, my definition of “not sucks” includes working flawlessly with my iPhone. Obviously apple ensured that the only way this could succeed is through CarPlay, but that’s not my fight, it’s GMs.
- rainsford 4y ago> Generally the problem people have with the automaker systems is that they sucked, not that they weren't CarPlay. I think that's part of it, but definitely not the entire story. People have a lot of their life on their phone, so the tighter the integration between their phone and other products, the more appealing the experience with that product is. No matter how good the automaker system is, if it's not basically your phone with a different screen, it's going to feel like an awkward disconnect, especially when there are plenty of alternative cars that do offer that seamless experience.
- MBCook 4y ago> Generally the problem people have with the automaker systems is that they sucked, not that they weren't CarPlay. I’m with vineyardmike. The problem was they sucked before CarPlay. Now that I’ve had a taste of controlling everything my way with my apps based on my preferences in a way I’m used to, I’m not going back. The best you could offer is perfect integration with my phone and the apps I use. But that will never happen, and at that point I might as well use CarPlay anyway. Cars need their own system for fallback but it’s a cost center. Don’t try to make it your primary selling point, you can’t win.
- tnel77 4y agoI personally love CarPlay. A requirement for my next vehicle is wireless CarPlay, and I will not even begin to consider it if it does not have that. Some people want ventilated seats or a V8. I want CarPlay. I think this is a very silly move by GM that they will quickly reverse.
- ashconnor 4y agoCarPlay is also a requirement for me. Wireless not so much. The adapters are pretty good these days.
- bdcravens 4y agoRecommendations? I purchased a device that lets me watch video in the head unit (runs Android and uses CarPlay protocol), and adds wireless CarPlay. However, it's shocking at how slow it is at going into CarPlay mode.
- debevv 4y agoI bought this 2-3 years ago https://cplay2air.com https://cplay2air.com and it has always worked wonderfully. It takes around 5 seconds to connect, which is fine for me since the entertaining system of my car it’s slow to startup anyway (totalling ~10 seconds from turning the key to carplay)
- ghostpepper 4y agoWhat adapter do you use? My car has a USB A port that accepts a regular iPhone charging cable - takes all of five seconds to connect as I'm getting in the car.
- ashconnor 4y agoThis one https://www.amazon.com/gp/product/B0BBG4QRPX https://www.amazon.com/gp/product/B0BBG4QRPX
- kube-system 4y ago
- oogali 4y agoMaybe the connected division was one of many potentially decimated by the voluntary buyouts? https://www.detroitnews.com/story/business/autos/general-motors/2023/04/04/gm-cfo-5000-salaried-employees-have-signed-up-for-buyout/70078485007/ https://www.detroitnews.com/story/business/autos/general-mot...
- criddell 4y agoGM is expecting $20-25 billion in annual subscription revenue by 2030. Dropping CarPlay and Android Auto will definitely lose them many sales. They are betting the lost sales will be less than the new subscription revenue.
- deleted 4y ago[deleted]
- function_seven 4y agoYeah I think they’re fever dreaming at those recurring revenue projections. Ditching the phone integrations will have them selecting for buyers who don’t care about the Infotainment Experience (ugh), either because they just want the basics, or they can’t afford to be picky or whatever. Then they imagine that these buyers—who didn’t care enough about the big screen in the dash to include it in their buying decision—will pay hundreds of dollars each year to rent an off-brand version of those same features. Someone over there has fond memories of OnStar, and is desperate to relive their glory days.
- bigmattystyles 4y agoYou say fever dream, I say business consultant getting paid big bucks to present and run focus groups for an idea that doesn’t pass the smell test. Seriously though, car company made infotainment systems are the biggest reason they shouldn’t be trusted with more life or death software like self driving. They’re all atrocious.
- crote 4y agoI genuinely wonder how they justify that figure. They could maybe justify a subscription if they offered a significant service, but they are by definition going to deliver a worse experience than CarPlay/Android Auto - simply due to it not being your own smartphone. Why would anyone buy an expensive car which is designed to last a decade while it has essential pre-installed features locked behind a subscription? If they want recurring revenue that badly, they should just lease it out.
- prepend 4y agoI’m guessing that Google is willing to do a revenue share with GM from the data. And apple doesn’t do that. So some dork at GM figured they can increase revenue with their own special system. GM has a history of stupid decisions trying to get service revenue from cars. I remember on Star and it was so dumb that they wanted me to lay $40/month for concierge service or something.
- hedora 4y agoThey still have onStar and push it despite all reason. I drove a 2023 chevy bolt recently, and couldn’t figure out how to get the nav software to render a map. All the buttons in the UI just initiated phone calls with someone (something?), so I hung up and switched to carplay. It is a shame that the onboard nav is busted. My old BMW EV has extremely good range predictions, etc., and my phone does not even attempt such things. I’m not switching to Google’s ecosystem, so I guess I’ll just never buy a GM moving forward.
- the_mar 4y agoSomeone. On star is really wild to me. It was such a good product pre smart phone and is entirely useless now
- the_mar 4y agoCar is a low margin item. SaaS is a high margin item
- goodluckchuck 4y agoYes, from what I’ve seen, Ford sells their vehicles at cost and uses that line of business as a funnel to generates profits from via financing. Some higher trim models have a decent margin, but many lower trims are sold at a loss, resulting in essentially no profit from manufacturing. Moreover, EVs are shaping up to be a financial disaster for carmakers. Tesla is essentially the only company to turn a profit on EVs, with the likes of Ford etc. hemorrhaging billions every year, with no end in sight. EVs simply aren’t shaping up to be a viable business without supplemental revenue streams.
- margorczynski 4y agoTesla has premium/luxury pricing and the clout. I'm not sure if your "average Joe" brand of car can make EVs work in their current state. There's a limit how much someone will pay for a Toyota or a Ford, less so for a Tesla or BMW.
- ChuckNorris89 4y agoAlso Tesla customers will tolerate the bobby-car build quality that enables Tesla to have great margins. Toyota and others actually bother with QA which eats some of their margins.
- panick21_ 4y agoThe idea that Tesla has high margin because their final assembly is not as perfect as BMW is complete nonsense. They have high margin because of advanced manufacturing, vertical integration, cheap battery supply and so on. Also, the evidence for Tesla having much worse quality (the reports) shows that they are only marginally worse then everybody else. Nowwhere near far enough to make a 30% margin difference.
- barbariangrunge 4y agoA lot of dealerships make more money on service than on sales. Extra money from subscriptions aren’t nothing when looked at like that. Average car service costs are what, 500-700/year over a long span of years?
- mgiampapa 4y agoEVs are turning the service business on their head. It looks like the only real service on the Bolt is tire rotations and a cabin air filter change for example.
- sokoloff 4y agoI have a Nissan LEAF. In 8.5 years, my expenses have included replacing wiper blades twice, cabin air filter twice, filling the washer fluid bottle several times and I’ve looked at the tires and brakes, rotating tires once. It’s been crazy nice. (As the family wrench-turner, even my wife’s CR-V, which is generally low maintenance, has felt like an inconvenient pig for maintenance demands by comparison.)
- GordonS 4y agoYou... don't need to change brake pads with an EV? Wheel bearings?
- lotsofpulp 4y agoI have never heard of someone needing to change wheel bearings in my 30+ years being alive in the US. And my family has driving 5 or 6 cars to 250k+ miles.
- rblatz 4y agoRegen braking means you use the brake pads much less than non ev cars.
- csunbird 4y agoRegenerative braking is very, very good at slowing the vehicle without brake pad involvement, so the brake pads are actually not used that much, unless you actively apply brakes with sudden/aggressive stops.
- cameldrv 4y agoSimple. Money. OnStar costs between $25-50 per month. Say the car lasts 15 years, that's $4500-$9000 over the life of the car, and this is all at an extremely high profit margin. Even if some people won't buy the car if it doesn't have Carplay, it's worth it because of how profitable selling services is, because people don't do the mental math on the cost.
- asdfman123 4y agoI can’t help but think of it as a kind of exchange that sells the long term value of the brand for short term profit.
- kalleboo 4y agoThey're looking at Tesla, Rivian and Lucid getting away with it, and thinking "but we're even better than those guys, so of course we can do it too!"
- ShadowBanThis01 4y agoI thought the whole "integration" thing was bullshit in the first place, but a proprietary GM system? This marks a return to the days of massively overpriced AM radios. The problem now is the way these systems are physically molded into the car. Back in the day you could put a good radio in. Good luck with that now. All we really needed for the last 15 years was a recess in every dashboard in which to put our already-giant phones, with a power and audio dock. I can't deny that CarPlay works relatively decently in my experience, but it's not really necessary. Even worse is the removal of auxiliary jacks from car stereos, another huge regression. So people can't even get a Bluetooth adapter that plugs into it and supplant this GM nonsense. There is no end to the mania for screwing the consumer. Subscription car features... WTF. Keep your old cars, people.
- jojobas 4y agoThere are plenty of aftermarket head units for specific cars. It's not that hard for the manufacturers to make another plastic part. You shouldn't have to though, now that there is this dual communication standard.
- xattt 4y agoHow do headunits like that address changing settings that can only be changed from the infotainment?
- BobLaw 4y agoI can't speak directly for these aftermarket infotainment replacements but implementations of aftermarket ECUs for example record CAN bus traffic to build a database of the various node IDs, messages, and values.
- jojobas 4y agoA hefty bit of reverse re-engineering and quite some pain in the neck. Also you'll do everyone a favour if you vote with your dollar for a car that has dedicated controls for AC and such.
- 4y ago
- ulfw 4y agoThe most sold EV brand in the US with about 2/3 of market share doesn't allow CarPlay either. Now don't get me wrong, I want my Apple Carplay too. I wouldn't want to buy a car without it. But the argument that "as the shakeup due to EVs begins, even loyal consumers will be considering other makes" I just don't see happen in real life today. Most EV buyers chose a Tesla. No CarPlay or Android Auto in that one.
- lamontcg 4y ago> The most sold EV brand in the US with about 2/3 of market share doesn't allow CarPlay either. 4.8% of the overall vehicle market.
- cpursley 4y agoYep, HN folks often live in a bubble (myself included).
- deleted 4y ago[deleted]
- fma 4y agoGM is keeping Android Auto and Apppe Car Play in their ICE vehicles. Comparing their decision to remove it from their future EVs and buyer decisions with Tesla is a better comparison than comparing it with 95.2% of the other market which will still retain it.
- _dain_ 4y agoThe most sold EVs are electric bicycles.
- helveticabold48 4y agoI think Tesla is pretty far ahead of its competition today people are ok to overlook the lack of apple carplay. but when others do catch up (if, say, Ford EV somehow become as good as Teslas) then i suspect ppl won't be so forgiving.
- hulitu 4y ago> How does this business decision make sense? At least Android Auto is a shitshow. Does not do screen sharing and you can only use apps approved by Google. I don't listen to music on my phone and i use a different navigation SW. And on top of that, Android Auto requires permissions to everything, refusing to start if permissions are not granted. I really see no useful case for Android Auto and investing money in it during car development is a waste of money and developer time IMHO.
- scarface74 4y agoNo car manufacturer is going to allow an infotainment system with apps that aren’t heavily vetted. There is too much of a liability and some things are completely illegal to have in view of the driver like video. Even older cars are careful, like my last car that would not even allow you to pair your phone to radio over Bluetooth while the car was not in park.
- scarface74 4y agoHow is a car a “high margin” item when GMs profit margin was less than 5% last year?
- Mesopropithecus 4y agoThe raw margin (per unit) can be high even when the manufacturer is a poorly run company.
- sokoloff 4y agoIt can be, but it’s not in the case of commodity auto makers. GM’s gross profit margin was a little under 14% for the quarter ending Dec 2022.
- remorses 4y agohigh-margin? They currently lose money on their EVs
- mike_hock 4y agoCarPlay and/or Android Auto is a non-negotiable item for me, too. Any car that has it is a no-go.
- rblatz 4y agoJust don’t enable it?
- b112 4y agoWhat are they putting in the water over there GM? Profit. Probably their own app store, inline with Google Play. And also forcing you to login on their gear, so your paid apps are available, and thus they can better track you / monetize you.
- pluc 4y agoIt makes sense because they can create and roll out their own system. Hell, make it subscription-based, with a premium tier. They don't give a fuck, people will still buy their big ass SUVs and pick-up trucks. How does it make sense to keep making cars bigger and bigger? It doesn't for us, but sure as shit does for them.
- classified 4y agoHas GM been bribed enough by Google and not enough by Apple?
- guywithahat 4y agoI think this makes a ton of business sense. They're only doing this on EV's, which have to be charged, and are likely concerned your car infotainment system is going to become a platform people buy things on they don't want to miss out on. Tesla has done it and because of this they have the best infotainment system in the industry. Frankly from what I can tell as well this is just editorialization, I don't think GM considers it a blunder and it seems like the smart move in my opinion (although it would have been smarter to start 10 years ago like Tesla did).
- Bluestrike2 4y agoDo I think there a plausible business case for subscription infotainment systems? Sure. Do I think there's a plausible business case for subscription infotainment systems that includes ditching Apple CarPlay and Android Auto so as to force people into buying a GM subscription? Well, no, not really. Tesla got away with not supporting CarPlay because they were one of the very few options available if you wanted an electric car. Rivian got away with it (for now, at least) because they were your only option if you wanted a high-end electric truck. Their customers were willing to sacrifice CarPlay because they had no real choice. Yes, Tesla's UI is nice-ish. That doesn't mean Tesla drivers don't want CarPlay support. Tons of them do, and it comes up regularly on online forums. If you look at infotainment systems like BMW's latest iDrive iterations and Mercedes-Benz's MBUX, it's quite clear that they've improved a great deal in the past few years, lack of physical buttons aside. I'd hope that GM manages to do the same. Things have gotten better and the alternative to using CarPlay is no longer living with a nightmarish hellscape of a UI put together by sadistic designers --or maybe just traumatized ones, tormented by someone who forced them to ship terrible infotainment systems for years. Despite that, consumers still love CarPlay and/or Android Auto and expect it to be available on their cars, with limited exceptions. Most people get in their cars, connect directly to CarPlay/Android Auto, and get on with their drive. When they have to use the native infotainment system, they do so with less frustration. But how many people do you think are just using a Bluetooth connection for their phone instead of CarPlay when it's right there? The answer is likely very, very few. GM is betting that they'll get its customers to accept not having it like Tesla and Rivian customers have to. That's a hell of a gamble when everyone else will be shipping their own expanded line of EV models at the same time and price points as GM.
- runlaszlorun 4y agoIs a car high-margin (as in profit)? I wouldn’t think they would be. Or perhaps you were using the term in the sense of a high dollar price point.
- lotsofpulp 4y agoWhatever the profit margin of an individual car is, the car manufacturing business is not a high profit margin business. GM/Toyota/Honda/Ford show 5%, to maybe 10% profit margins. They would definitely benefit from convincing people to pay for 50%+ profit margin software as a service subscriptions.
- dionidium 4y agoNo, not really. Manufacturers make about 5%. Dealers make about 1-2%. People assume the margins are much higher because it's an expensive product, so there's a big gap between perception and reality. See: https://cardealermagazine.co.uk/publish/how-much-profit-do-car-manufacturers-make-on-new-cars-the-truth-versus-perception/234641 https://cardealermagazine.co.uk/publish/how-much-profit-do-c...
- andrewmutz 4y agoThey are probably trying to emulate Teslas product strategy Tesla doesn't offer android or iPhone carplay. Instead they try to offer a software experience superior to those. It does Spotify, gps, etc but also manages the car itself. Depending on what the user is doing it makes sense. If the user mostly wanted their phone for music and directions, you can build that stuff in house and have it turn out okay. If the user wants carplay for much more than that, then it's not good.
- jinushaun 4y agoGM had decades to make a high quality in-car entertainment system on par with Teslas and failed. CarPlay and Android Auto was supposed to save us from that.
- usaar333 4y agoMy Tesla's lack of Android Auto is one of its biggest drawbacks. Even for navigation it is bad, as I'm forced to use the inferior Tesla map app (which unlike say Waze can't compute directions considering carpool lanes). You also end up with a lack of synchronized directions history to your phone. IMO, the only upside to the customer is avoiding plugging a phone in. The phone experience is otherwise generally better across the board. (On a latter note, I consider the Tesla UI good for a car, but bad overall. Climate app also generally sucks).
- theshrike79 4y agoTesla is the only company I trust to keep their infotainment system up to date. But still I'd really want it to support CarPlay, because I use Apple Music and Overcast the most when I'm in my car. I also prefer the way Apple Maps pronounces the street names over here (phjone lang set to english) compared to the utter butchering Google Maps does.
- outside1234 4y agoIt doesn’t make sense - and when they get the data they are going to have to revert it. I will literally not buy a car without CarPlay. I am sure I am not alone.
- metaphor 4y ago> A car is a high-margin item, so the impact of even a handful of consumers choosing not to buy must be huge, right? From GM's latest 10-K filing[1], quickly distilling the past 3 years of consolidated income statements down to its Automotive ex. GM Financial stream: | (US$ Millions) | 2022 | 2021 | 2020 | |-------------------|---------|---------|---------| | Revenue | 143,975 | 113,590 | 108,673 | | Cost of Sales | 126,892 | 100,544 | 97,539 | |-------------------|---------|---------|---------| | Adj Gross Profit | 17,083 | 13,046 | 11,134 | | Adj Gross Margin | 11.9% | 11.5% | 10.2% | |-------------------|---------|---------|---------| | SG&A | 10,667 | 8,554 | 7,038 | |-------------------|---------|---------|---------| | Adj EBITDA | 6,416 | 4,492 | 4,096 | | Adj EBITDA % | 7.4% | 7.5% | 6.5% | ...and Ford for the sake of comparison[2], distilling down to Automotive ex. Ford Credit and Mobility steams: | (US$ Millions) | 2022 | 2021 | 2020 | |-------------------|---------|---------|---------| | Revenue | 148,980 | 126,150 | 115,894 | | Cost of Sales | 134,397 | 114,651 | 112,752 | |-------------------|---------|---------|---------| | Adj Gross Profit | 14,583 | 11,499 | 3,142 | | Adj Gross Margin | 9.8% | 9.1% | 2.7% | |-------------------|---------|---------|---------| | SG&A | 10,888 | 11,915 | 10,193 | |-------------------|---------|---------|---------| | Adj EBITDA | 3,695 | (416) | (7,051) | | Adj EBITDA % | 2.5% | (3.3%) | (6.1%) | There are at least two major underlying markets at play here: manufacturer-dealer and dealer-consumer. Recent Bureau of Labor Statistics research paints a colorful picture of market dynamics from 2007-2019[3] where post-GFC increase in domestic competition and the rising cost of manufacturing forced dealers to "innovate" as a way of offsetting new car sales margin decline, which set the stage for 2019-2022[4] where manufacturers largely internalized an outsized supply chain squeeze while dealers gouged the shit out of consumers. So when you say "high-margin", I think you're looking in the wrong bucket. Then there's GM Financial segment sitting on a $65.322B retail finance receivables portfolio[5] of which 27.2% are sub-680 FICO consumers, and carrying $96.854B of debt[6]...nevermind rising interest rates, increasing layoffs, and a looming credit crunch. Remarks like: >> In 2021, GM Financial redeemed $1.5 billion in aggregate principal amount of 5.20% senior notes due in 2023. The redemption resulted in a $105 million loss on the early extinguishment of debt. ...buried in page 76 of the fine print suggests internal bleeding damage control. > How does this business decision make sense? It doesn't make sense because you're thinking about it from the perspective of consumer optionality based on today's trend, not as a publicly traded business balls deep in competition looking forward. Considering GM's top 2 selling vehicles are trucks[7] (Silverado = 33.8% of 2022 Chevy units sold; Sierra = 46.7% of 2022 GMC units sold)---and speculating on the retention quality of consumers who would readily classify CarPlay integration as "not negotiable", choosing to overweight an accessory feature that X competitors may also offer over other characteristics/intangibles salient to GM products---I begin to question both the net value prop and opportunity costs being wholesale handed over to Apple. [1] https://www.sec.gov/Archives/edgar/data/1467858/000146785823000029/gm-20221231.htm#i54c9b176c0804fcabe51d5f8101e6190_103 https://www.sec.gov/Archives/edgar/data/1467858/000146785823... [2] https://www.sec.gov/Archives/edgar/data/37996/000003799623000012/f-20221231.htm#ie50adb6d899d4f6ebcb5e73f7bd915e7_277 https://www.sec.gov/Archives/edgar/data/37996/00000379962300... [3] https://www.bls.gov/opub/mlr/2022/article/automotive-dealerships.htm https://www.bls.gov/opub/mlr/2022/article/automotive-dealers... [4] https://www.bls.gov/opub/mlr/2023/article/automotive-dealerships-markups.htm https://www.bls.gov/opub/mlr/2023/article/automotive-dealers... [5] https://www.sec.gov/Archives/edgar/data/1467858/000146785823000029/gm-20221231.htm#i54c9b176c0804fcabe51d5f8101e6190_130 https://www.sec.gov/Archives/edgar/data/1467858/000146785823... [6] https://www.sec.gov/Archives/edgar/data/1467858/000146785823000029/gm-20221231.htm#i54c9b176c0804fcabe51d5f8101e6190_157 https://www.sec.gov/Archives/edgar/data/1467858/000146785823... [7] https://www.caranddriver.com/news/g39628015/best-selling-cars-2022/ https://www.caranddriver.com/news/g39628015/best-selling-car...
- JeremyNT 4y agoI agree it's totally perplexing. GM doesn't have a moat, all of their vehicles have competition. Could this just be a bluff/negotiation tactic or something? It seems so perplexing to remove these features, rather than giving the option for Android auto and car play along with their own android platform. If their own system has better native functionality, people will see this as a selling point. If not, they're free to ignore it. Cars are not TVs. It's a major purchase that somebody will be using for years, so people will pay attention to this kind of detail. Surely they know this?
- metaphor 4y ago> If their own system has better native functionality, people will see this as a selling point. If not, they're free to ignore it. This implicitly assumes that the manufacturer's direct cost of integrating/supporting such features, and indirect opportunity costs of not deploying an alternative replacement, are both effectively $0.