In-Dash Navigation Up 25%, But Still Not As High As Expected

By Amy Gilroy On Jun 2 2008 - 6:00am




In-dash navigation has emerged as a key breadwinner in car audio as prices fall and as awareness of navigation soars, although sales are not as vibrant as originally expected.

In-dash navigation sales increased 73 percent in units and 24 percent in dollars during the first quarter compared with the same quarter last year, according to the NPD Group. This pace will likely continue through the full year, said Audiovox Electronics president Tom Malone.

Now that in-dash navigation prices start around $700, compared with 1,500 to $2,000 two years ago, the product is becoming the new high-end alternative to the CD receiver, and retailers are finding it's not too big a step-up sale from a $399 CD player.

Still, in-dash navigation has failed to soar to the heights of its portable cousin that saw well more than 300 percent growth last year. "I don't think [in-dash navigation] is as big as all of us thought it would be some two or three years ago," said Alpine marketing VP Stephen Witt, noting that the category was affected by the counter current of a slowdown in head unit sales. "It's growing slightly from last year, primarily driven by aggressive price points, but the category pales in comparison to the PND sales and growth."

Malone added, "I don't think anybody has been overly thrilled with in-dash navigation. I think it is now starting to get some attention and that's a function of the pricing now available."

Suppliers do not expect to see continued steep declines in prices, however. "Lowering prices will be a challenge," due to fuel increases that affect plastics and component costs as well as changes in Chinese labor, said Malone adding, "Certainly, we always want to drive the price to retails that will drive volume but the rush to lower prices in that category over the last two years will be slowed or prices will be flat," he said.

Dual also said the company is more interested in adding new features in the future than reducing price points.

This year, suppliers such as Pioneer and Kenwood added built-in Bluetooth to their in-dash navigation models for the first time — last year they offered Bluetooth as an add-on — which several retailers mentioned as a strong selling point. "Features like Bluetooth, HD, iPod and satellite attachments to these products are causing customers to strongly consider moving out of a portable," said Dan Jeancola, merchandising senior VP for Seattle-based Car Toys.

In-dash navigation is also positioned as a lower-cost alternative to an OEM system. Neil Riffer, buyer for Abt Electronics, Glenview, Ill., and others said a key customer is "someone who wanted it in the car when they bought it new, but it wasn't available or it was part of a package with a lot of extras so it cost $3[,000] $4[,000] or $5,000."

Pioneer is targeting a similar customer with its hybrid GPS AVIC-F500BT, due this summer. It's aimed at "the customer that has a Mercedes but didn't go up to the navigation level [when he bought the car] … which would have been a $5,000 package," said Larry Rougas, Pioneer marketing and product planning VP.

The same strategy has opened up a niche market for retailers selling in-dash navigation to the local car dealer. "Ultimately, you have to sell CE products where people buy them," said Michael West, Eclipse marketing director.

Industry members also claim that retailers have gotten better at asking for the sale. "Retailers are enthused. They've figured out how to sell in-dash navigation, and they are not afraid to step people up … It's like what Wayne Gretzky said, 'I miss 100 percent of the shots I never take at the goal,'" said Keith Lehmann, Kenwood consumer electronics senior VP.

West added that the industry will begin playing up fuel savings as a side benefit of navigation. "Our partners at TomTom have done several studies that show people save miles driven when using the device for finding a destination for the first time. This, along with the real-time traffic, offers direct fuel savings each week."

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