Auto Electronics

Frost sees nav system price declines driving market growth

Declining prices should ensure continued growth in the automotive navigation systems market between 2007-2013, according to Frost & Sullivan. Nearly 44% of U.S. consumers are likely to purchase a navigation system within six months to a year.

Consumers that prefer a fixed navigation system will likely wait for one or two years before purchasing a device, while those that prefer a portable navigation system will likely purchase one within a year, according to Frost research analyst Rahul Ganju.

Ganju notes that North American automakers plan to offer navigation systems as standard or optional fitment across multiple vehicle models in the near future. As prices decline, automakers have begun offering systems more widely, which will likely significantly drive growth for the original equipment hardware segment of the market. As production volumes increase, per-unit prices are expected to decrease further, thereby making navigation systems affordable for mid-market vehicle buyers.

Increasingly, automakers promote navigation systems as a key vehicle differentiator in their efforts to attract potential vehicle buyers. However, as the installation rates in the original equipment navigation market continue to rise, the aftermarket will eventually decline. This trend is expected to come to fruition beyond the forecast period (i.e., after 2013).

“The declining unit price of navigation systems, rising consumer awareness, rapid technological advances and increased functionality are some of the major factors driving growth for the OE and aftermarket segments,” Ganju concludes. “Price decreases are the result of higher rates of product innovation and greater economies of scale. This generates substantial demand for these products in both the OE and aftermarket segments as it increases affordability and improves the performance/price ratio.”
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