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The aftermarket for in-car navigation is in a transitional phase, shifting from stand-alone products to those integrated with mobile video and/or telematics, suppliers say.
The market is shifting in several other ways this year, attracting new entrants including Audiovox, Kenwood and Pioneer. It is also transitioning to DVD, rather than CD-ROM and is luring a new and younger demographic, according to market leader Alpine, which says that young people are growing increasingly interested in the segment as an offshoot of mobile video.
There are few authoritative industry numbers published for aftermarket in-car navigation, but suppliers said they expect 30,000 to 40,000 units to sell this year, remaining flat or slightly down from 2000. CEA's estimates are lower, with 12,177 units selling year- to-date through August, representing approximately $16.4 million in sales. Many industry members had predicted stronger growth for the year based on the increasing consumer awareness seen in 2000. But high price and some shifts in the market have deterred that growth, they said.
"In the year 2000, there was a building of consumer awareness through both the aftermarket and OE's and there was a decision by Blaupunkt and Alpine to roll out navigation in a bigger way," explained Blaupunkt director of engineering Jim Frazier. "We both thought maybe this was the time to do it."
He noted, however, that "the car companies began to focus more on telematics than navigation and that made the retail aftermarket nervous."
Tom Malone, Audiovox senior VP of the mobile electronics group, blames slow sales on high prices. "We are not encouraged by the navigation industry right now. However, we feel its an important business to be in for the future. We're not disappointed we're in it. We have had good success, but we know the dealers are reluctant to purchase inventory," he said.
Malone said many retailers sell only a few products a month and can't afford to stock products at $1,100 and up in dealer cost. They also can't afford the displays, he said, so many sell by special order only and fail to promote the segment. Other dealers shy away from it waiting for prices to drop, he added.
This year, Pioneer and Kenwood launched products that both companies claim have been well received and have sold beyond expectations. At the same time Panasonic, which showed prototype DVD navigation units at CES in January, decided to postpone a market entry. According to national marketing manager Rob Lopez, the company "decided to delay it to take advantage of some new mapping software scheduled for next year." No firm 2002 launch date has been determined.
Pioneer says its sales have been increasing since its launch in July and Kenwood says sales of its Excelon KNA-DV2100 have "exceeded our expectations," according to VP of marketing and sales Bob Law.
Pioneer VP of product planning Keith Burnett added, "There's huge potential for the market. It's just a matter of when the products become a little more affordable."
Several suppliers see the link with mobile video as critical to expanding the market.
"Consumers are buying video and once they have the screen, they are asking if they can add on navigation later on. So as in-car video grows, that will help support navigation," said Frazier. "It will also get some push from the OEM because it is beginning to filter into the midline cars, not just the luxury cars. We are not giving up, but the focus on selling navigation as a stand-alone category is waning. It's blending more with in-car entertainment."
Alpine agreed. "Probably the biggest opportunity in navigation comes in marketing products to a younger audience, expanding from the traditional target market of the older, more affluent customer," said VP of marketing Stephen Witt. "The younger consumer is not interested in rear-seat entertainment, but the focus of their system is quickly moving to in-dash video. This represents the new, cool, in-vehicle device. We incorporated navigation displays into all of our event marketing this year and we are witnessing a strong interest in it on the part of young people."
For that reason the company will show in January navigation products that integrate with its mobile video products.
Witt added that the youth market is growing up using PDAs and cellphones and they want products in the car that will integrate with those devices, which may be another focus of navigation in the future.
Audiovox says the future of in-car navigation is in real-time traffic reports and the company hopes to offer instant traffic updates in the next few months, according to Malone. Audiovox is also releasing a new "navigiation-in-a-bag" product called the Nav 2000. It offers voice directions without maps or a screen. The Nav 2000 comes as a self-contained system in a canvas bag with GPS antenna, CD-ROM drive and microphone. The system is voice activated to provide directions without distracting the driver. It is expected to carry a retail price of $899.