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GM boss: Sell more services
January 12, 2000: 3:01 p.m. ET

Smith says developing ongoing in-car services like OnStar crucial to company
By Staff Writer Chris Isidore
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DETROIT (CNNfn) - GM and other automakers need to sell more services to their customers on an ongoing subscription basis, and GM's ownership of Hughes Electronics gives it an advantage in that field, General Motors Corp. CEO Jack Smith said Wednesday.
    Many analysts have speculated that General Motors (GM) will spin off Hughes, which already has its own tracking stock. Smith would not comment on speculation about the future of the company, including published reports that GM will sell Hughes Electronics' satellite manufacturing operations to Boeing for about $4 billion.
    However, he said Hughes, which includes satellite manufacturing and the satellite television service DirecTV, brings an important element to GM as it seeks a new relationship with customers, such as its in-car communications service, OnStar.
    "I think it's been very beneficial for us," he said at a press conference Wednesday at the North American International Auto Show. "That is why we are in the lead for OnStar, why we'll be first with satellite radio in the vehicle. How do you put a value on that?"

Jack Smith, chief executive, General Motors Corp.

    Satellite radio will bring up to 100 national commercial-free stations into cars starting in the first quarter of 2001. GM and DirecTV each made a $50 million investment in the company that is to provide the service, XM Satellite Radio (XMSR). While it could develop that service without Hughes being part of GM, Smith said that having Hughes in the family leads to more innovation.
    "What about the next great thing?" said Smith. "It turns out that Hughes has talked to us about knowledge they have that can turn some of those channels into television."
    The barrier to television in the car has been the mobile dish necessary to pick up the signal, but Smith said Hughes is making progress on that.
    "We don't have that in the product land right now. But that's the kind of thing that Hughes gives us the early warning to the potential," he said.
    And he said it is crucial that GM develop services such as OnStar in car Internet access and satellite entertainment that it can provide on a subscription basis.
    "This is the where the value is for automakers," he said. "You can imagine if we can develop a fee for every car we make, what the value would be for GM. We sell 8 million vehicles a year, it doesn't take much of a fee to be significant."
    GM announced an alliance with America Online (AOL) Sunday that, in addition to helping AOL customers buy GM cars online, is exploring AOL interactive services as part of OnStar. GM already plans to bring voice-activated e-mail to cars using OnStar soon.
    "We want to be a first mover in this technology," he said.
    In other news at the show Wednesday, Fujio Cho became the first president of Toyota Motor Corp. (TM) to speak at the show. Cho, who oversaw the opening and early years of production at Toyota's Georgetown, Ky., plant from 1987 through 1994, described his visit as a homecoming. He also said Toyota will produce 1.4 million vehicles in the United States once it completes expansion of an Indiana plant. Worldwide, he expects the number three automaker to sell 5.7 million vehicles this year, up from 5.4 million in 1999.
    He also called for more cooperation between automakers in research and development of low- emission vehicles.
    "We can no longer afford to ignore the signs of global warming and the fact that consumption of gasoline and other fossil fuels is on the rise," he said in prepared comments. "Environmentally friendly cars will soon cease to be an option; they will become a necessity."
    Toyota was excluded from a low-emission vehicle research project funded by the U.S. government in cooperation with GM, Ford Motor Co. and the former Chrysler Corp., now DaimlerChrysler, since 1993. But it has its own clean technology alliances with GM and Volkswagen.
    "To reach our goals as an industry, we must continue to cooperate in the laboratory and compete in the showroom," he said. Back to top