GM’s OnStar to Expand Into Mexico After China Growth

General Motors Co. (GM), after introducing OnStar in China in 2009, is expanding the in-car communication service into Mexico next year as it looks to add more markets in the future.

The expansion is the first move by OnStar’s new leader, Mary Chan, hired in May from Dell Inc. (DELL) She is the second executive hired by Chief Executive Officer Dan Akerson to remake the automaker’s subscription service that provides accident alerts, navigation and other driver assistance.

Akerson is planning a corporate reorganization that realigns GM along global brands and functions instead of regions, two people familiar with the deliberations have said. The CEO named Chan to the newly created position of president of global connected consumer. The move combines OnStar operations and the company’s infotainment efforts under Chan. Infotainment integration remains under Mary Barra, the global product development chief, GM said.

“Vehicle development cycle is a four-year cycle” while consumer products have a cycle of 18 to 24 months or less, Chan said this week in an interview. “Being able to bring those two together and be able to accommodate the innovations in the consumer environment inside the vehicle is something we’re expected to bridge.”

Chan’s group is looking at more ways for consumers to interact with their vehicle.

“Starting as early as 2013, we’re going to start adding more and more capability,” she said.

OnStar, RelayRides

OnStar and GM’s infotainment developers had disagreed on strategies in the past causing features such as Bluetooth to be unavailable, Mark Boyadjis, an IHS Automotive analyst based in Minnetonka, Minnesota, said yesterday.

The developers now are “working together,” he said. “That’s a good thing.”

Other moves have occurred at OnStar. In July, Detroit-based GM said an upstart company called RelayRides, which helps facilitate car sharing, would be the first third-party developer to integrate with OnStar’s application program interface. OnStar subscribers are able to rent out their vehicles through RelayRides’s application.

Opening up the application interface to other companies to add new services for OnStar is similar to how outside companies create applications for smartphones, Chan said.

“Apple built a great product,” she said of Apple Inc. (AAPL)’s iPhone. “It also built a great platform to innovate. That’s an opportunity that we have inside the auto industry. There are a lot of services and innovations that we have not seen in this environment until we have a platform.”

OnStar, available on 40 2012 model year vehicles, has about 6 million customers in the U.S., Canada and China.

Technical Standards

To enter Mexico, GM must develop its OnStar technology to work on the global system for mobile communications, or GSM, standard. It has been using the code division multiple access, or CDMA technology, in the U.S. and China. Incorporating GSM into OnStar opens the door to expand into markets that use that technology, including Europe and elsewhere in Latin America.

“We’re making investment in those platforms” that can be expanded “for a global footprint,” Chan said.

The lack of GSM technology helped keep OnStar out of some markets, Boyadjis said yesterday. OnStar still faces challenges, he said. “Building a business and expanding the brand and getting the product packaging and pricing down for those new markets, that’s the tougher part.”

Executive’s Background

Chan joined GM from Dell where she was senior vice president and general manager of enterprise mobility solutions and services. In 2008, she was named “Top Woman in Wireless” by trade publication Fierce Wireless Industry Daily, GM said.

OnStar has seen turmoil under Akerson, a former CEO of XO Communications Inc. Former Revol Wireless Inc. executive Linda Marshall, who took over as OnStar president in February 2011, left the company in February.

Akerson’s changes at OnStar are similar to others he’s made elsewhere at the largest U.S.-based automaker.

The CEO hired Randy Mott as chief information officer in February, assigning him to overhaul the company’s IT systems. Tim Lee, who heads GM’s international operations, has been named new global head of manufacturing operations. The global product development section was revamped to consolidate vehicle development under one executive chief engineer for each program, removing a layer of management and about 20 executive positions.

GM gained 4.1 percent to $23.37 in New York, the highest closing price in more than four months.

To contact the reporter on this story: Tim Higgins in Southfield, Michigan, at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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