Frost examines European OEM navigation systems
October 8, 2009 by John Day
New analysis from Frost & Sullivan (http://www.automotive.frost.com/), “Strategic Analysis of the European Market for Low Cost OEM Navigation Systems,” estimates the market to be worth 0.15 million in unit sales in 2009 and predicts it to reach 1.83 million by 2016. Fixed in-dash, mobile phone and integrated personal navigation device (PND) systems, proposed as a standard feature in select vehicle models, will drive this market expansion.
“Low cost OEM navigation will usher in the era of infotainment integration and eventually lend a new lease on life to the telematics industry,” notes Frost & Sullivan research analyst Vishnu Muralidharan. “PNDs have long dominated the market and will continue to challenge automakers in providing a short-term low cost solution. However, automakers have already embraced low cost OEM navigation and in-car navigation will become ubiquitous in the future.”
Renault has paved the way in offering dedicated in-dash systems as a standard feature. Within four years, dedicated in-dash systems will prevail as a standard feature and will come to dominate the low-cost OEM navigation systems market.
The biggest challenge facing the market is the dramatic slowdown in Europe. Automakers have been focusing more on fuel efficiency while consumers have been reluctant to dig deeper in their pockets for a fixed navigation system when portable units are available at a nominal price. Eastern European markets have been particularly hard-hit.
“This recession stuck the navigation market, which was expecting an upswing in the European markets, at a particularly inopportune time,” explains Muralidharan. “The current situation will force many vehicle manufacturers to postpone their plans.”
Nevertheless, the more developed European markets will likely rebound once government measures address consumer concerns and create a favorable climate for sales. To maximize growth opportunities, automakers should use navigation as a differentiating factor to sell vehicles.
Currently, with the rapid growth of the GPS-enabled mobile handsets segment, it is ideal to use these devices and bundle them with a service package provided by telecom operators. This model has proved to be highly successful in Asian markets.
“Auto manufacturers should segment navigation into two distinct categories during these difficult times; one, a low cost portfolio based on GPS-enabled handsets and fixed in-dash for low segment vehicles and the other, a high-end, premium, feature-rich embedded package, for high-end vehicles,” advises Muralidharan. “The low-cost portfolio should be managed by a partnership between auto manufacturers and navigation providers.”