TOKYO - On-board vehicle navigation sales in Japan turned sharply upward in fiscal 1998 despite the country's nearly 10% drop in vehicle demand.

Sales in the year ending last March 31 are expected to grow 24% to a record-high 1.3 million units, based on manufacturer forecasts. Then for fiscal 1999 and fiscal 2000, demand is projected to increase 23% and 25% to 1.6 million and 2 million units.

Analysts attribute the upturn to improved technology offering more detailed maps and faster processing speed, as well as to lower production costs. Reflected in the higher sales figures are a greater number of systems offering DVD, or digital video disk, and VICS capability. VICS (Vehicle Information & Communication System) is designed to provide "real-time" information on accidents, congestion, road construction and parking availability, transmitted to the vehicle via roadside beacons and multiplex broadcasts.

A national VICS Center here, which is supported by the Ministry of Construction, Ministry of Posts & Telecommunications and National Police Agency, went into operation in 1996 and now offers service on major expressways in Tokyo, Osaka and Nagoya. Plans call for expanding the service throughout the country by 2005.

Already an estimated one-third of navigation systems sold in Japan have VICS capability - a total of 315,000 units in fiscal 1997. Within the next three years, VICS is expected to be a standard feature on most new systems; and yearly navigation sales are being driven by an aggressive marketing program from Toyota Motor Corp.

The leading Japanese automaker projects that 80% of cars it sells in the domestic market in the next five years will be equipped with navigation systems; that would amount to around 1 million units for Toyota alone.

Says Hidekazu Oe, deputy general manager of the ITS planning division at Toyota: "Like with air-conditioners, we don't expect all car owners to embrace the technology, but it's going to be a substantial number."

Meanwhile, Koji Ukena, director of the ITS Development Center at Matsushita Communication Industrial Co. Ltd., predicts that half of all navigation system sales in fiscal 2000, approximately 1 million units, will incorporate DVD technology.

Matsushita Communication, a subsidiary of consumer electronics giant Matsushita Electric Industrial Co. Ltd. and Pioneer Electric Corp. are the leading manufacturers of DVD navigation systems. Smaller players include Alpine Electronics Inc. and Fujitsu Ten Ltd.

Matsushita and Pioneer both began marketing DVD systems in June 1997. Alpine and Fujitsu Ten followed in 1998.

Mr. Ukena notes that one DVD "holds the equivalent data of seven CDs." Thus, he explains, "a single (digital video) disk replaces seven map CDs, the number required to provide detailed maps covering all of Japan."

He adds that processing speed has been dramatically reduced; it now takes just five seconds to plot the optimal route from Tokyo to Osaka, a distance of some 250 miles (400 km). And with the development of more powerful microprocessors, Mr. Ukena expects to halve that time to 2.5 seconds by 2001.

Vehicle navigation technology has evolved steadily throughout the 1990s. Nissan Motor Co. Ltd. marketed the first global positioning system, complete with road maps, in 1989. Route guidance systems went on sale in 1992, adopted first by Toyota for the Crown.

Then in 1995, detailed city road maps became available - along with voice guidance, a significant user-friendly factor. In 1996, navigation with VICS capability and voice controls was introduced. This was followed in 1997 with the industry's first DVD system.

During the next two years, the navigation-system industry is expected to integrate interactive communication and car multimedia systems.