A new survey suggests an increased willingness of vehicle buyers in several key European markets to pay for navigation systems and features, with portable systems set to dominate.
The Frost & Sullivan study was based on 1,974 interviews in France, Germany, the United Kingdom, Italy and Spain and respondents included current owners of navigation devices (fixed and portable) and non-owners interested in purchasing one in the future.
The study, Consumer Desirability & Willingness to Pay for Navigation Systems and Features, found that European sales of navigation systems reached over 10m units in 2005 and estimated this would reach 35m by 2010.
“Navigation systems have become increasingly affordable and are now the target of consumer electronics participants who view the automotive market as an untapped opportunity,” said F&S research analysts Praveen Chandrasekhar and Franck Leveque. “Convenience, efficiency and the need to avoid using paper maps seem to be driving interest in navigation systems.”
59% of non-navigation users interviewed appeared interested in purchasing a navigation system in the future. However, respondents in the United Kingdom were not interested in the systems, which were considered an unsafe option when compared to multiple maps.
Tomtom (a leading Netherlands-based maker of portable systems) had the highest brand awareness (both aided and unaided) amongst users and non-users of navigation systems across the European countries surveyed.
In terms of ownership, TomTom had the highest penetration of navigation systems, followed by Sony, Blaupunkt, Navman, Garmin and Acer.
Respondents rated ease of use (interface with the system) as the most important factor in their decision to purchase a navigation system, followed closely by the cost of the system.
“Ease of installation was also an important consideration, which suggests that potential customers need a hands-on demonstration prior to purchase,” said Chandrasekhar. ”Vehicle manufacturers and suppliers would benefit from educating consumers at their dealerships and explain how navigation systems work.”
According to the interviews, consumer electronic retailers were found to be the preferred purchase channel, which points to the fact that respondents need to touch and feel the system prior to purchase. Whilst almost 60% of fixed system owners purchased at a car dealership, there were four key purchase channels for portable owners: consumer electronics stores, the internet, car accessory shops and department stores.
“Consumers realise the benefit of embedded navigation systems and are ready to pay two to three times over and above the price of a portable device. But clearly the mass market cannot stomach prices of EUR1,500 to EUR2,000 or even more,” said Leveque.
“In this price-centric market, portable systems are set to dominate, given their obvious price advantages.”
