The number of cars, trucks and crossovers sold with in-vehicles navigation systems will quadruple in North America by 2019, according to a new study, growing to nearly 13 million new systems annually.
But that may not be as good news as it might seem for traditional navi system suppliers, such as Denso, Harman or TomTom, cautions Boston-based Strategy Analytics, Inc. It warns that high-tech firms, such as Apple, Google and Microsoft, are “beginning to battle for share” as they grow their own automotive business.
The good news is that future navigation systems, whoever supplies them, will likely be less expensive and offer significantly more features. Price, even more than functionality, has been a barrier to entry for many consumers – or led them to go with aftermarket devices that can be purchased at a Costco for $100. And now, potential buyers have the opportunity to go with smartphone navigation apps.
“The recent Apple announcement regarding its automotive OEM partnerships and the expansion of Apple’s mapping efforts could significantly change the in-vehicle navigation market,” says Strategy Analytics Senior Analyst John Canali.
The penetration rate of in-car navigation technology varies widely by market. Factory navi systems are near-ubiquitous in Japan, especially in labyrinthine cities like Tokyo. In the U.S., however, the technology got off to a slow start, and while after-market units have become popular holiday gifts, factory-installed systems have gained ground much more slowly.
That’s beginning to change. Some makers have recognized that price is a critical obstacle. They had to switch from a low-volume, high profit margin strategy, said Canali, to one that recognizes they can sell far more navigation systems but at a lower profit per unit.
Ford, for example, now offers navi systems on some models for as little as $600. In fact, the basic hardware is already in the car and the motorist pays the premium for software contained on a thumbnail-sized SD card.
Meanwhile, proposed legislation that would mandate the use of back-up cameras should also help lower prices and increase sales, suggested Canali, as most of the basic hardware, notably the in-dash video screen will already be installed in most vehicles once such legislation goes into effect.
via Bottom Line.