Building on last year’s record sales, Japanese makers of car navigation systems expect demand to grow annually by 9 percent over the next decade, reaching an estimated 5 million units in 2010 (and a cumulative 42 million) and accounting for more than 80 percent installation in new vehicle demand. Sales, which hit 2.3 million last year, are on target to reach 2.5 million when the current business year ends this coming March.
Driving demand has been a rapid shift to DVD (digital video disk) and HDD (hard disk drive) systems which, in the case of DVD, hold seven times more data than compact disks. This increased data storage capacity makes it possible to expand car multimedia functionality. DVD systems now account for an estimated 80 percent of sales. Their share is expected to peak next year at 85 percent, then gradually be replaced by more advanced HDD units. Since June 2001, when Pioneer Corp. introduced the first HDD unit, the segment has grown to around 5 percent of demand. The most recent entry: Matsushita Communication Industrial Co. with its “You Navi,” which boasts an industry-leading 16 gigabytes of capacity enabling operation of TV, AM/FM radio, mini-disk audio and DVD video and car navigation/route guidance services.
Listing for $1,483, Matsushita Communication plans to sell 10,000 units per month in the competitive accessories market, which now accounts for only 35 percent of demand. The company’s Fukuoka-based affiliate, Kyushu Matsushita Electric Co., is the leading producer of portable units, also sold in aftermarket stores like Autobacs Seven (the Japanese equivalent to Pep Boys).
Due to its earlier entry into the HDD segment, Pioneer is expected to pass Matsushita Communication for the top sales spot this year. In fiscal 2001, Matsushita Communication (soon to be reintegrated into Matsushita Electric Industrial Co., its principal shareholder) claimed an estimated 22 percent of sales. Pioneer, a close second at 21 percent, was followed by Aisin AW Co., Denso Corp. and Alpine Electronics Inc.
Against this backdrop, there are now fewer than 15 car navigation system makers, down from 30 a decade ago, and the number is likely to fall below 10 in the coming five years. Says one observer: “Competition is intense and has forced companies into alliances. For example, Kenwood Corp. and Denso use essentially the same unit, with key components produced by Denso. Similarly, Aisin AW supplies OEM systems to Alpine.” Meanwhile, analysts predict that by the end of the decade around 4 million units (around 80 percent of car navigation system sales) will have Vehicle information and communication system (VICS) capability. VICS provides realtime information on accidents, congestion, construction and parking availability, all transmitted to the vehicle via roadside radio and optical beacons and multiplex broadcasts. Launched in 1996 in Tokyo, Osaka and Nagoya, VICS service is scheduled to cover all of Japan by spring 2004. 
At present, 5 million out of 73 million registered vehicles in Japan have VICS capability. Sources predict that the cumulative total will reach 30 million in 10 years’ time, out of an estimated future car pool of 80 million units. According to a 2001 survey of 20,000 VICS users, nearly 90 percent feel they can get information about traffic congestion, 75 percent alternative routing to avoid traffic congestion and 70 percent about road conditions. The survey was inconclusive about the potential for time-saving and better fuel consumption.
In a related development, the Japanese government announced in June that it would put up half of a $1.6 billion investment needed to develop and launch a nationwide satellite communications system for cars. The system reportedly would go into commercial service in 2008.
Private sector participants in the project include Toyota Motor Corp., Toshiba Corp., Mitsubishi Electric Corp., NEC Corp. and Zenrin Co. On the government side, the project is supported by the ministries of Economy, Trade & Industry, Science & Technology, Land, Infrastructure & Transport, and Posts & Telecommunications.
The new system, when combined with GPS, is expected to improve position accuracy to an estimated 10 cm (4 inches) when a car is moving.
This article was provided exclusively to Automotive Industries by J•REPORTS, a new information service offering in-depth coverage of automotive technology based in Tokyo. For additional information about this and other studies and prices, contact jreports@attglobal.net
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