Can Portable GPS Spur Fixed Nav Unit Sales?

By Amy Gilroy -- TWICE, 8/21/2006

With so much attention focused on portable GPS, suppliers are wondering when and if fixed in-car navigation will benefit from the popularity of its smaller, lower-priced cousin.

Many industry pundits are forecasting double-digit growth for fixed navigation this year, but some say that the second quarter was less than stellar for the category.

Eclipse estimates that industry sales for fixed navigation for the second quarter were down by 25 to 30 percent, as were many segments of the car audio market, according to marketing director Michael West.

For the year, however, Pioneer is holding to its estimates of 30 to 35 percent growth for the industry over last year's sales of 110,000 units. Kenwood said its sales are up and it expects double-digit increases for the industry this year. Alpine says its fixed navigation sales are flat, excluding sales of its new Blackbird portable.

Most optimistic is the Consumer Electronics Association, which expects a 51 percent increase in fixed navigation unit sales to dealers this year and a 43 percent increase in dollar sales, compared to last year.

Growth in fixed navigation pales in comparison to the expected tripling in sales of portable GPS this year. Fueling that market are lower prices that have dipped below the magic $500 price point for fully featured models, while fixed navigation is locked at $1,000-plus.

The question that industry pundits are now asking, is will the craze in portable navigation eventually create a step up market for fixed, in-car navigation. Will consumers soon tire of wires of dangling from their dashboards and want a larger touch screen for easier navigation?

JD Power and Associates believes the answer is yes, but they will wait until they purchase a new car.

Mike Marshall, director of automotive emerging technologies for JD Power believes the portables “will be an introduction to people into navigation that will motivate them to consider OEM installation in the next new vehicle.” But he believes the portables will compete with after-market fixed navigation and so after-market fixed sales will suffer.

Marshall estimates that 1.2 million OEM navigation systems were factory installed in model year 2005 with 1.5-1.6 million expected in 2006.

But aftermarket suppliers contend that they will share some of the limelight. Pioneer is a leading champion of this logic. The company surveyed its in-dash navigation customers over two and a half years and found that 30 percent owned a portable GPS beforehand. When asked what type of system they would purchase for their second vehicle, over 50 percent said an in-dash aftermarket product, Pioneer claimed.

Some say that the popularity of aftermarket fixed navigation will depend partly on price.

Keith Lehmann, Kenwood car electronics VP, estimates that some fixed models may drop to a more affordable $600 or $700 (including screen) over the next two or so years. During that time, more consumers who purchased a portable navigation will want to step up to an aftermarket model for the larger screen, faster processor, and more points of interest, he said.

Mobile Navigation Sales To Consumers

Rank	Brand	Unit Volume Share Mar-May 2006	Average Price Mar-May 2006
1	Garmin	47.8	$693.40
2	TomTom	25.2	$588.00
3	Magellan	14.2	$564.80
4	Pioneer	3.8	$1,475.78
5	Eclipse	1.7	$1,669.88
6	Alpine		$773.23
7	Lowrance Electronics		$595.61
8	Sony		$524.57
9	Cobra		$706.84
10	Kenwood		$839.88
Note: NPD intermixes portable and fixed in-car navigation. At the time of this chart, all of the above suppliers offered portable GPS exclusively except Pioneer, Eclipse, Alpine and Kenwood, which offered fixed navigation. In mid May, however, Alpine also began shipping the Blackbird portable GPS. After the time period measured in this chart, Pioneer also entered portable GPS (in July) with the AVIC-S1. Source: The NPD Group ©TWICE 2006

Fixed Nav Promotions Heat Up

LONG BEACH, Calif. — Both Pioneer and Eclipse are offering aggressive promotions on in-dash navigation devices.

Pioneer, only two months after launching its first portable GPS product, is giving it away as part of a promotion on its AVIC-D2 in-dash navigation system.

Pioneer said it will offer a free $600 AVIC-S1 portable GPS through Oct. 1 with the purchase and installation of an AVIC-D2 double DIN CD/navigation system that carries a $1,500 suggested retail price.

The AVIC-S1 is a fully-featured portable with pre-loaded maps of the United States and Canada, SD card slot, and Bluetooth for hands-free dialing.

Pioneer is also offering free installation, for up to $200, on the AVIC-D2 and the AVIC-N3 through Sept. 4.

Pioneer is ranked as the No. 4 leading overall GPS supplier in the U.S. after Garmin, TomTom and Magellan according to the The NPD Group, Port Washington, N.Y., in sales to consumers from March through May.

Eclipse, ranked as the No. 5 GPS vendor in the same study (see table above), is offering consumers a choice of a free rear vision backup camera or a Sirius outboard tuner with the purchase of any of its three in-dash AVN navigation models.

Through Aug. 31, purchasers may receive a BEC-105 backup camera, typically at a $239 suggested retail, or the Sirius SIR-ECL1 ($199) with the purchase of an AVN7000, AVN6600 or AVN5500.