Navigating Europe

Their home market nearing saturation, Japanese manufacturers of vehicle navigation systems are turning to Europe as the next big growth region.

Denso Corp. expects European demand to exceed 3 million units in 2006, passing Japan, which currently is the world's largest market, with annual sales of 2.8 million units.

By 2009, Denso forecasts European sales of navigation systems will approach 5 million units annually. Meanwhile, growth in North America and Asia is expected to reach an estimated 2.7 million and 1.5 million annual units, respectively.

As a result, the global market is expected to reflect doubling demand to 12 million units, from about 6 million in 2004. In Japan, Denso predicts marginal sales growth to 3.2 million units.

Denso estimates its worldwide share of the navigation market at 14% and is the main supplier to Toyota Motor Corp., its largest shareholder, and General Motors Corp.

Mitsuharu Kato, managing officer of Denso's ITS Products Group, says U.S. sales growth will depend on lowering unit prices to less than $700. “That is what American car makers want,” he says. “Unfor-tunately, we can't achieve those prices at current production volumes.”

Output of 100,000 units monthly would be necessary to reach such a price point, says Kato.

Meanwhile, the Denso executive says auto makers have begun shifting away from DVD (digital video disc) navigation formats to hard disc drive (HDD) units. By 2006, he estimates half of sales in the Japanese market will be HDD types.

First marketed by Pioneer Corp. in 2001, HDD navigation systems provide up to 30 gigabytes of memory, enabling a full range of audio-visual and “wireless” telecommunication services, as well as route guidance.

All Japanese vehicle navigation-system makers, including Aisin AW Co., Matsushita Electric Industrial Co. and Denso, have HDD units on the market.

What comes after HDD? “Solid state,” says Kato. “It could happen by 2010. I can't say with certainty. But that is the direction. Solid state is smaller and more reliable than HDD.”

Looking at the general field of telematics, Kato predicts navigation will be the core technology for future systems. And in the next few years, he expects the vehicular navigation systems to be integrated with braking, lighting and climate controls.

“When approaching a corner, gears shift automatically,” he says. “Or when entering a tunnel, the ventilation system automatically switches off, preventing air from outside the car to enter.”

Kato says Denso is well positioned to meet future system requirements because of its strength in air-conditioning, radar, sensors and a growing number of electronic controls. By 2010, he expects the upper third of vehicles built in Japan to be equipped with such multifunctional systems while the cockpit display “becomes a ‘big human-machine interface.’”

To that end, Denso is working closely with Toyota to improve the auto maker's G-Book telecommunication module. Kato sees G-Book evolving in two directions — one for upscale cars, including such features as onboard diagnostics, communicated directly to the dealership.

A second, less costly option centers on an individual's cell phone. Kato is particularly upbeat about prospects for mobile phones.

“If Bluetooth becomes standard on cell phones, G-Book could be available in almost all product segments, including entry-level cars,” he says.

In addition to Toyota, G-Book has been adopted by Mazda Motor Corp., Mitsubishi Motors Corp. and Fuji Heavy Industries Ltd. (Subaru) along with Toyota subsidiaries Daihatsu Motor Co. Ltd. and Hino Motors Ltd.

In two related fields, Kato is pessimistic about the near-term prospects for voice-recognition controls, saying they are too complicated. He says it is possible to incorporate map data with head-up displays. “But I would be concerned that this might be a distraction for the driver,” he warns.

In the U.S., however, Denso is upbeat about head-up navigation systems. Matt Matsushita, CEO of Denso International America Inc., told Ward's in October that Denso is working with several customers on windshield-projected navigation systems.