Ford's Next Growth Engine Could Already Be in Your Driveway
Ford is focused on increasing the penetration of its software services and subscriptions -- helping to change the low-margin narrative .
Ford's next growth engine may already be in your driveway. The company is expanding its software and connected services offerings to increase revenue beyond the initial sale of trucks. These high-margin services give Ford more ways to earn money after customers drive away. Ford reported over 1.7 million active paid software subscriptions in September, a more than 40% increase year-over-year.
Meanwhile, U.S. vehicle sales declined 6.6%. The company is also generating record software-services revenue, with BlueCruise and connectivity leading the growth. GM's OnStar business generated over $800 million in recognized revenue in Q3, with Super Cruise revenue growing approximately 60%. GM ended Q3 with $6.8 billion in deferred revenue from OnStar services, indicating future revenue recognition.
These services have the potential to grow alongside the adoption of electric vehicles, which are typically more advanced in software, technology, and over-the-air update capabilities. Ford and GM's growth in software subscriptions and digital revenue could change the perception of the automotive industry as a low-margin business.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
