Vehicle navigation systems are installed in just 3 percent of passenger vehicles made in North America, but that's expected to double in five years as prices come down, according to a new report from an auto research firm.
CSM Worldwide predicts the number of navigation systems installed in North America will grow by 91 percent in the next five years, ballooning from a $406 million to a $778 million business. CSM Worldwide measured the growth of factory-installed systems, which are far more common than stand-alone systems that owners install.
"In North America, consumers are finally catching on to what Japanese consumers have appreciated for a while now," Don Montoy, a market analyst for CSM Worldwide, said Thursday.
Japan has the highest rate of installation of navigation systems, at 16 percent of vehicles produced. That's expected to grow at a much slower rate of 32 percent by 2010 because the market already is so large, Montoy said. Navigation systems are already a $1.6 billion market in Japan.
The European market is expected to see the greatest growth in navigation systems, Montoy said. Montoy expects that market to grow by 103 percent to $2.5 billion by 2010. Europe now installs navigation systems in 8 percent of the vehicles it produces.
Navigation systems currently cost around $2,000 as optional equipment. But the price has been falling as automakers have learned to incorporate the systems into vehicle audio systems, reducing the need for separate parts, Montoy said.
The quality also has improved in the last 10 years, and the systems are now simpler to operate and better at recognizing voice commands, Montoy said.
As a result, navigation systems, which used to be optional only on luxury vehicles, are becoming a standard feature on higher-end trim levels of minivans and mid-size cars.
DaimlerChrysler AG's Town & Country minivan, for example, now offers a navigation system as a standard feature on its Limited model, which starts at $35,530. The system isn't offered on the base model, which starts at $21,965, but it's a $1,430 option on the minivan's more expensive Touring model.
Ford already has navigation systems on some SUVs and the Lincoln Town Car and plans to offer the system on six 2006 vehicles this fall, including the Lincoln Zephyr sedan and two SUVs, the Mercury Mountaineer and Mercury Mariner hybrid.
Toyota Motor Corp. offers navigation systems on all Lexus models and at the highest trim levels of 11 Toyota cars and trucks, spokesman John McCandless said. General Motors Corp. offers navigation systems on all Cadillac models, the Chevrolet Corvette, GMC Denali SUV, Buick Terazza minivan and upcoming Buick Lucerne sedan, spokesman Tom Wilkinson said.