Pioneer Stirs Up In-Dash Nav With $1,000 AVIC-D3

By Amy Gilroy and Joseph Palenchar -- TWICE, 1/29/2007

LAS VEGAS — Pioneer set the price of its AVIC-D3 in-dash navigation A/V system at an industry low of $1,000, claiming it wants to help in-dash navigation compete with popular portable GPS devices.

But the action sent a mild shock wave through the industry, as the new price point may lead to erosion in one of the more profitable 12-volt growth segments.

At least three suppliers told TWICE during or just after International CES, held here earlier this month, that the Pioneer price action was "disruptive," noting that most comparable tier-one in-dash A/V navigation units are priced between $1,400 and $1,600. Audiovox and Alpine said they would not lower prices while Kenwood and Alpine expressed concern that other vendors might.

"I think their pricing is a fairly major move," said Audiovox mobile electronics group senior VP Tom Malone, noting, "We won't react. We think our price position is correct." He added, "In the car stereo space, in-dash multimedia is the cherry. That's where the growth is — that's where the car stereo customer is looking to spend their money … To get to that larger volume, you have to move your pricing into an area that will attract more customers."

Alpine commented, "It's disruptive in that $1,000 is a psychological price point. Most other comparable units are $1,400 and up," said marketing VP Steve Witt.

Pioneer said it is not trying to "make a tough situation for any manufacturer," according to Karen Rubin, navigation marketing and product planning director. "As the leader of in-dash navigation we want to stimulate the segment. We're often compared against the portable GPS, and we want to make in-dash more competitive with portable GPS," she said. Portable GPS prices have fallen steadily since last year with the bulk of models priced below $500.

Retailer margins on the AVIC-D3 will still be strong, Rubin claimed, noting that this is not the first time Pioneer has taken an aggressive price position in a new segment. "We did something similar with the AVIC-N1 and the AVHP5700 DVD." The latter was the first top-tier-brand in-dash video unit to hit $999, Rubin said.

Along with several other vendors, Pioneer added USB connectivity for the first time in its 2007 lineup, and improved compatibility with other portable devices. Announced at CES were six Pioneer and Premier head units with a built-in iPod Direct Control port, available on head units starting at a suggested $180. The feature speeds up access to music files and delivers a closer-to-iPod user interface on the head units, the company said.

At CES, Pioneer also showed its first two in-dash CD players with back-panel USB ports that can control USB drives and MP3 players from the radio (and requires a cable). Suggested retails start at $260. A USB adapter to connect USB devices to a head's iPod Direct port is also available.

The company is also expanding 3.5mm minijack inputs, either on the front or back panels, to all head units, and it is adding built-in Bluetooth for audio streaming and cellular hands-free use to two models. Bluetooth adapters continue to be available for other head units.

A new AVIC-Z2 will replace the current flagship AVIC-Z1, offering newer map software from TeleAtlas and more specific navigation. Where most units bring users to a certain section on a block, the Z2 directs them to the exact address, Rubin said. Shipping is expected in March/April at a suggested retail of $2,200. Like the Z1, the new model is a double-DIN HDD with CD/DVD player, XM NavTraffic and a smart routing feature that "learns" a driver's preferred routes.

Also new in mobile electronics are two CD/DVD head units with LCD video screens targeted to the youth market. Both feature DiVX video playback. They are the $800-suggested AVH-P4900DVD and $1,000-suggested AVH-P5900DVD. The latter adds iPod Direct Control and ability to display iPod videos. Both feature inputs for XM and Sirius tuners.