- The Washington Times - Friday, November 29, 2002

American motorists aren't buying into the need for high-tech navigation systems and other telematic devices.

Availability of navigation systems has grown, but few buyers are willing to pay $2,000 or more for an electronic map they use infrequently. Statistics show that only 175,000 of the vehicles sold in the U.S. during the 2001 model year were equipped with a navigation unit, according to J.D. Power and Associates. This is only 1 percent of the 16.68 million vehicles sold in that model year.

Executives of electronics and automotive industries attending a recent conference in Detroit acknowledged that it is going to take dramatically lower prices and devices that provide real-time traffic information to put telematics on the road to high volume and high profits in the U.S. market.

They said consumers still need to be convinced they need the devices.

Plans to fix the problem include:

•Developing navigation systems that the industry can sell for $500 or less.

•Making it easier to pay for telematics, either by charging one-time fee or linking per use charges to a cellular phone.

•Streamlining the package to offer fewer services but focusing on features that motorists find useful.

•Simplifying the operation of the devices.

•Making the devices portable, or linking them wirelessly to other technologies.

Drivers need to be able to choose from a menu of services that are customized as to how they are displayed.

Clifford Fox, vice president of in-vehicle applications for Navigation Technologies Corp. of Chicago, a supplier of map databases, told the conference that real-time traffic information may be the breakthrough application needed to convince U.S. drivers of the viability of telematics.

European motorists can obtain real-time traffic information by pressing a button on the radio, and it has become a must for car owners.

Navigation systems in Japan have high penetration across all segments of the car market. Part of this is because the country's lack of a coherent addressing system, but price is another reason. Systems can be purchased for as little as $1,000.

The appeal was increased five years ago with the launch of real-time traffic services. Toyota Motor Corp. estimates that half of its cars on the road in Japan have a navigation system.

Mr. Fox said drivers will value navigation and telematics systems once they get used to using them. "You hve to take it from occasional use to daily use, and traffic helps take the system to daily use," he commented.

Another executive, Larry Sweeney, vice president of Tele Atlas North America Inc. in Menlo Park, Calif., said providing real-time traffic information is a feature drivers would pay for if it were inexpensive and simple to obtain.

"I do think it is pretty evident that most of us are tired of adding more monthly bills," he said. "I think that these services are going to get bundled. It may be to your cell company or to the telematics provider."

Telematics and navigation systems must offer services that enhance safety and don't charge for what is available free on the radio or internet, according to Walter Maisel, vice president of interior and infortainment for Siemens VDO Automotive.

"We have made different mistakes. We were saying everything is possible … browsing through the Internet, the latest surprise from the stock market. But that's not the highest demand for a car driver. We missed too many things together," Mr. Maisel said.

Some companies are taking those systems, which rank at the top of the cost scale, and stripping out features and costs. "People don't want that. They don't want a piece of the package that is missing certain systems," warned Philip George, a director of business development for Johnson Controls.

Siemens VDO claims to be about a year away from supplying an original equipment "multimedia" radio that will lower the cost of telematics and in-vehicle navigation from about $2,000 to between $300 and $500.

Mr. Maisel said that price is close to what is available on the aftermarket now. The difference, he said, are the expectations consumers have of original equipment.

"Whenever you get a system through a carmaker, it has to be the highest standard of reliability," he said. "Our demands on an OEM-installed system are much, much higher, even though it only provides the same level of functionality as an aftermarket system."


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