General Motors reported that its OnStar subscription services ended the second quarter with deferred revenue of $6.3 billion, an almost 50% year-over-year increase. The automaker is bundling long-term prepaid OnStar and Super Cruise trials into new vehicle purchase prices, with all 2025 and newer models including eight years of OnStar Basics and select equipped models including three years of hands-free Super Cruise. These digital services carry gross margins around 70%, far above the company's overall gross margin of 15% to 20%. GM remains on pace to reach $7.5 billion in deferred revenue by the end of this year and expects to recognize $3 billion through 2026. Rival Ford Motor Company is pursuing a similar strategy with its BlueCruise subscription, which also delivers margins around 70%, though Ford has not adopted the upfront purchase model and reported 1.22 million BlueCruise-equipped vehicles globally last year.
General Motors CompanyOnStar deferred revenue up nearly 50% YoY to $6.3B, indicating strong adoption of high-margin subscription services.
Ford Motor Company