DETROIT – OnStar President Chet Huber says the boom in portable navigation systems is good for his business too, but he downplays chances of Internet programs, such as email, working their way into General Motors Corp. vehicles anytime soon.
“(In) the used-vehicles market, where the alternatives are very limited…(a portable system) is a wonderful next step for somebody who wants to move beyond paper maps,” Huber tells journalists at a recent OnStar media event here.
OnStar currently offers turn-by-turn navigation to subscribers and for the ’09 model year will make “Destination Download” available to 80% of all GM vehicles. The feature allows subscribers with screen-based navigation systems to download destinations from an OnStar adviser on the fly.
Another feature bowing later this year for screen-based users is “OnStar e-Nav” which allows a subscriber to plan routes at MapQuest.com and then download up to five destinations to his vehicle.
In the meantime, aftermarket navigation systems are booming as the units become smaller and more portable, consumers grow accustomed to the technology and prices continue to drop with each new product cycle.
Companies such as TomTom NV and aftermarket leader Garmin Ltd. now offer fairly sophisticated systems for as little as $100, down from about $500 two years ago.
In 2006, market research firm iSuppli Corp. says, the average selling price of portable navigation devices fell 23% to $333 from $434 in 2005. This year, prices average $282.
Worldwide portable navigation system deliveries are expected to jump from an estimated 12.7 million units in 2006 to roughly 71. 4 million in 2013, iSuppli says.
Ward’s data shows that just 3.7% of all ’07 model cars built in the U.S. included an embedded navigation system, but the technology appeared in 21.6% of all domestically built light trucks.
The growth outlook in the U.S. for original equipment screen-based navigations system is conservative, with installations projected to rise to about 9% of all vehicles sold in 2011 from 6% today, according to CSM Worldwide, an auto industry forecasting group based in Troy, MI. Penetration globally should increase from about 15% of all vehicles delivered today to upwards of 30% by 2013, according to ABI Research, a New York-based technology-research-firm.
One reason for the slow U.S. market expansion is cost, iSuppli says in a report released last year. Most embedded systems sell for $1,200-$2,200. They add as little as 3% to the price of a premium vehicle, iSuppli says, but as much as 15% to the cost of a midrange vehicle, putting the technology out of reach for many buyers.
But Huber thinks factory-installed, screen-based systems have a distinct advantage: They’re not hanging from the windshield by a suction cup.
“There have always been low-cost-substitutes,” he says, citing portable vs. factory-installed DVD players. “But many people will buy an embedded system because it is a better execution.
“There is a lot to be said for the aesthetics of a factory-installed system,” Huber says.
However, the OnStar chief says improving consumer awareness benefits everyone in the navigation-system market.
“We’re not arguing they have to be wrong for us to be right,” he says. “We just really know what our space is. And as we watch their technology roadmaps and we see the trends in their industry, we think bringing more visibility to the category of navigation is positive for us. It’s not negative.”
Huber also downplays the potential for Internet systems, such as email, bleeding too far into cars and trucks, mostly because a majority of the miles driven in the U.S. are by a single-occupant vehicle.
“We must have a high degree of confidence that it is safely integrated into the vehicle,” he says. “Also, customers aren’t asking for it, and we won’t do a technology just because it is possible.
“And it doesn’t fit our brand right now,” Huber adds. “We have a lot planned, but email is not at the top of our list.”