Navigation Sales Up, But Still Struggling

In-car navigation racked up double-digit sales growth this quarter due to increasing consumer awareness. But the market remains well below expectations, according to most suppliers.

In-car navigation sales through March increased 26.5 percent in units and 10.1 percent in dollars over the previous year, according to CEA.

"Prices are coming down and more consumers are being exposed to it because car makers are advertising navigation more than ever," noted Chris Dragon, Harman Kardon's brand marketing director. "There's a lot of buying public that didn't have clue and saw a Lexus ad, and said, 'wow.' "

Half the new cars sold in the United States now offer navigation as an option, according to Garmin. But in the aftermarket, growth is minimal. Even the double-digit gains are minimal considering the small base of approximately 22,000 units, and the fact that the market has remained close to that level for years, suppliers said.

"Looking at the big picture, the category has had lower growth than we had hoped," Alpine marketing VP Stephen Witt noted. "Everyone is still in search of the right combination of accuracy, value and price."

One of these right combinations may come in the form of handheld products that have been gaining momentum over the past year. Handheld navigation units such as those from Garmin and Magellan have become more popular lately due to improvements in turn-by-turn accuracy. Also there are many GPS add-on kits available now for PDAs, such as Palm and PC Pocket-based models.

Garmin says its handheld GPS sales are up over 20 percent.

In June, it will offer the first consumer Palm-based PDA with built-in GPS at an estimated price of $589. Called the iQue 3600, it is a full-function Palm that allows users one-click access to turn-by-turn directions for names and addresses in the user's address book.

Other suppliers offer GPS add-on products for PDAs, including car cradle kits from names such as Navman and, coming this summer, Sony. There are currently over 13 million PDA users in the United States according to IDC, Framingham, Mass., but the "attachment rate" for GPS solutions is still very low — in the tens of thousands — according to IDC analyst Alex Slawsby.

The potential for handhelds in general to compete with in-car navigation has not gone unnoticed by aftermarket suppliers. Rob Lopez for Panasonic said the company is reconsidering its market strategy at present, "due to the increase in inexpensive alternatives that consumers have today with in-car and portable navigation."

The main challenge to the in-car navigation segment is still price, said most. Audiovox claims it is working aggressively to find a popular price/value option and will release in the next 60 days an in-dash CD system with full navigation and car stereo capability for $999. The company hopes to offer a non-screen, voice recognition-based, turn-by-turn system in the future for $799. "At $799, that would start hitting the hot button," said Tom Malone, Audiovox senior VP mobile electronics.

Among other new navigation products is a GPS cradle from Navman. Designed to work with Hewlett-Packard's iPaq PDA, the NavMan 3450 is an upgrade of the 3420. The new version adds an external antenna (as some European cars come with metalized windows that interfere with the GPS signal) and it offers easier scrolling through points of interest. The adapter plugs into the cigarette lighter. It will ship and the end of this month at $299.95.

Sony is also planning to ship in July its first navigation product in many years. The company is offering a car cradle for several Sony CLIE PDA models. The unit allows the CLIE to switch to a display with larger icons for easier viewing in the car. The user receives turn-by-turn directions with audible prompts that can be delivered through the car stereo head unit. Suggested retail is $299.