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New gadgets not selling
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March 3, 1997: 7:20 p.m. ET
On-board computers keep drivers from getting lost, summon help, etc.
From Correspondent Jody Davis
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NEW YORK (CNNfn) -- The Onstar System is a communication and navigation system that can summon help, track a car if it's stolen and help people who forget where they parked. A lost driver can also get directions from an Onstar operator. The system is available in all but one of General Motors' Cadillac models.(QuickTime Movie 853K)
"I think navigation as a whole is the sleeping technology of the automotive scene right now," said Rik Paul, feature editor with Motor Trend. "It's not really hit it big, but I think it has the potential to hit it very big."
When it awakens from its slumber, that is.
Cadillac has sold more than 28,000 cars since Onstar's October debut, but only 2,100 with Onstar.
BMW offers a map-based navigation system with a monitor in its higher-end models, but just 15 percent of the customers are opting for the high-tech extra. A similar system from Oldsmobile has been ordered by just 2,000 motorists.
Why aren't these gadgets selling?
Onstar is $900 and $22.50 a month to maintain. Oldsmobile's system is $2,000, and BMW's $2,800.(QuickTime Movie 799K)
"Once the price point gets down to the cost of a good AM/FM cassette stereo package -- $400 or $500 all inclusive, including the video screen, bells and whistles, then I think you've got a marketable option that'll have much broader, more mass appeal," said Joseph Phillippi, an analyst for Lehman Brothers.
GM's Onstar says its sales are on target, but admits the division won't turn a profit for four or five years.
Analysts have mixed opinions, some saying Americans don't want more gadgets in their cars. Others, however, are betting these systems will gain acceptance, just as sunroofs and car stereos did when their prices came down.
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