Pioneer's AVIC-N1 Redefines In-Dash Navigation

By Amy Gilroy -- TWICE, 7/25/2005

The Pioneer AVIC-N1 in-dash navigation and DVD combo player was the first smash-hit success for in-dash navigation, and one which redefined the marketplace in terms of form, function and price, according to industry members.

On the market from April 2004 to April 2005, the Pioneer AVIC-N1 ranked No. 1 in dollar sales, quickly knocking Alpine out of the top slot and winning almost half the business in its class, according to The NPD Group, Port Washington, N.Y.

Even Pioneer's competitors credit the AVIC-N1 with redefining the navigation category. At a time when many systems were priced over $3,000, the AVIC-N1 combined a flip-out monitor, DVD player and navigation into a single chassis for under $2,000. In addition, it could play a DVD and audio while navigating, furthering the budding subcategory of “audio, video, navigation,” now known as AVN.

Pioneer also backed the AVIC-N1 and the navigation category with a $12 million advertising campaign, according to marketing VP Michael Townsen.

Another key selling point of the AVIC-N1, Townsen said, was “the fact that it was built into one DIN chassis, because it made it easier for the retail salespeople to sell it and for the consumer to buy.”

Already, suppliers have taken a cue from the AVIC-N1's success and are offering AVN units at new low price points, such as the new Eclipse AVN5435 at a $1,899 suggested retail.

For Pioneer, the challenge this summer has been to build on the success of the AVIC-N1 with its new replacement model, AVIC-N2, a task which Pioneer claims has been very successful, although some retailers disagree (see story below).

Looking at the period from January through June this year, Pioneer claims the AVIC-N2 “is outselling the AVIC-N1 at a ratio of about 177 percent. When we add the AVIC-D1 [a new navigation-only version] which only started shipping in May, we're selling about 250 percent vs. last year,” said Townsen, explaining that distribution for the products has expanded to Best Buy and Circuit City. Neither retailer carried the AVIC-N1 during the launch months last year.

Navigation sales as a whole, including portable models, are skyrocketing. According to NPD, sales for total navigation — including portable, but not including handhelds — grew by over 100 percent year-to-date this year over the same period in 2004, hitting $45 million in January through May sales, on about 51,000 units. Pioneer estimates the in-dash navigation market represents about 15 percent to 20 percent of that volume.

The in-dash market is expected to see further gains as real-time traffic services become more popular. But at present the market faces some minor challenges, according to suppliers and retailers. These include low consumer awareness for real-time traffic, and supply issues from Alpine — the No. 2 supplier — having missed the summer travel season without a 2005 navigation unit. Alpine says a new NVE-N872A navigation unit with dual real-time traffic systems is due in September.

AVIC-N2 Facing Challenges

The AVIC-N2, a replacement for the wildly popular AVIC-N1 in-dash navigation/DVD system, is facing some challenges at retail, which throw a spotlight on some of the greater challenges in the 12-volt market.

According to a TWICE poll of seven leading 12-volt specialists, six said sales of the AVIC-N2 are significantly below those of the AVIC-N1, with some retailers seeing levels at a quarter or less than half of those of the AVIC-N1.

Nearly all blamed new circuitry in the N2 that prevents it from playing video while a vehicle is in motion. While most suppliers offer a similar safety feature, many of these systems can be overridden by the user, said retailers.

Pioneer explains, “We incorporated in the AVIC N2 a video-while-driving lockout feature that is more difficult or cannot be bypassed. We did that because we felt with all the legislation against car video that, as a leader in the industry, we needed to prevent the product from being used in a way for which it is not designed,” said marketing VP Michael Townsen.

But retailers said much of the appeal of the AVIC-N1 was that it was a DVD-Video system that added navigation for $400. “Because of the restrictions,” said one 12-volt buyer, “the N2 is now a $2,000 nav system, and that's a lot to ask.”

Instead, said retailers, many consumers are turning to competitors who offer DVD/navigation, such as Eclipse. Marketing director Michael West said sales of the Eclipse AVN5435, as well as other Eclipse AVN units, are now outselling its traditional head units. “Demand is so high, our retail base can't satisfy it, so we will have an announcement soon on opening up a new retailer that will help us specifically with the AVN products,” West said.

The problem of consumers and/or dealers overriding manufacturer safety mechanisms has been an issue in the industry for a number of years.

Explained Steve Madeiros, owner of Sound FX in West Warwick, R.I., “Truly, if you had DVD in your car, more than likely you would not be watching video while you are driving. It's hard to do and dangerous. But on the sales floor, while you are pitching the product, it seems to be very important to people that the unit be able to play while driving. It's almost like when someone buys a TV and they want PIP and channel scan, but when they get home they never use those features.”

Pioneer acknowledged dealer frustration. “We have received a lot of negative feedback from retailers but a great deal of it is from the salespeople and not the end users.”

Pioneer said the solution is to better educate salespeople. “When we discuss with the retailers the reasons why it's important to have that feature they all agree. No one wants the liability if an accident occurs, nor would they want anyone injured,” said Townsen.

Another solution, Pioneer said, is to reach out to an older demographic, which tends to be interested in navigation rather than video. For the younger DVD enthusiast, the company now offers a different DVD-only system called the AVH-P5700DVD for $1,000 suggested retail price, he said.

“This year, there's more competitive product, including portable navigation, and a lot of dealers aren't in portable navigation. In order to keep the AVIC-N2 selling at the same velocity, they have to expand their consumer base and get more of these commuters coming into their stores,” Townsen said.

Overall, however, dealers said in-dash navigation is up this year over last. Seattle-based Car Toys said its in-dash navigation sales are up 300 percent year-over-year, and Custom Sounds, Austin, Texas, also said the segment has grown 300 percent.

Autosound of Lexington, Ky., said nav sales through June are up 40 percent in dollars and 66 percent in units over last year. Stereo West, Omaha, Neb., said sales are up by double digits, and Sound FX said sales are up by 40 percent year-to-date.