Onboard navigation systems -- are they worth it?

Do you know the way to San Jose? What about getting around once you're there?

Travel-weary drivers know it's far trickier to locate Terraine Street in that California town than getting to its city limits. That's why luxury cars like the Infiniti FX now tout an onboard navigation system as the perfect way to overcome the frustration of unfolding and following a map while driving.

The navigational systems pinpoint a vehicle's location, courtesy of military-installed global positioning system satellites across the country, and combine it with mapping software (Navtech is the name car aficionados recognize). The results show and tell drivers explicitly how to reach a predetermined destination.

Make a wrong turn, and the software gently guides you back on track. Some vendors contract for special features, such as points of interest, restaurants, gas stations and hospitals that appear in the database, to enrich your journey.

Of course, your trip isn't the only thing being enriched. Is the technology worth several thousand dollars compared to a $1.99 map or free street-by-street directions printed off the Internet?

So far, many American drivers have answered, "yes," although not as resoundingly as motorists worldwide.

But in 2002, the global consulting firm Frost & Sullivan produced a report that showed U.S. sales of automobile navigation systems lagged behind those of Europe and Japan, primarily because North American roads tend to have a relatively well laid-out structure and streets typically don't change names frequently.

Since the report's publication, both the popular Honda Accord and Toyota Camry have started offering optional navigational systems. When Veerender Kaul, senior industry analyst for the automotive group at Frost & Sullivan, last checked in with Honda, the take-up rate for the option was nearing double digits.

"That's encouraging," says Kaul, "but it's not reached a point where you can look at any volume-related cost reductions. Until we see significant interest among this [lower-cost] segment of vehicles, you won't see any substantial expansion in the market."

Location drives demand
Some drivers, however, say today's cost is worth it.

"I would never buy a car without it, but that's because I live in Southern California where there's a lot of traffic and many routes to navigate," says Donald Buffamanti, founder and CEO of AutoSpies.com. "If I lived in Montana where there are two roads, it's useless."

Similarly minded big-city drivers also might be willing to shrug off the expense, especially if they rarely venture beyond familiar office buildings, parks or grandma's for Thanksgiving. When they do hit the longer road, the reassurance of an in-car navigational guide is worth it.

The market, however, will continue to treat navigation systems as neat toys until the dynamic versions (now on some European roads) find their way to U.S. showroom floors, Kaul predicts. Once these real-time systems start warning drivers of traffic accidents, daily construction route changes and weather conditions along their chosen routes, he expects to see consumers perk up their ears.

And like any technology, when it becomes more widespread, prices should fall. They've already tumbled from an initial $4,000 price tag to between $1,500 and $2,000 installed.

"Many people don't see a real value at that price for the current functionality," Kaul says. In his estimation, the dynamic versions must remain under $2,000 to generate mass excitement.

Costly features still appeal
John Haynes, however, has seen the opposite. As purchasing manager at Al and Ed's Auto Sound chain in Los Angeles, he can offer consumers the aftermarket version with voice prompters for between $999 and $1,299.

"We thought the market would explode in that direction, but we're still selling more of the $2,000-and-up systems," he reports. "Consumers like moving graphic interfaces over the static abilities of the cheaper versions."

But even at the higher price points, don't anticipate a sales push from the dealership. In fact, most of the salesmen Buffamanti deals with shy away from highlighting the higher-end feature.

"You may make $200 in commission from the sale, but you don't want some guy coming back to your dealership for the next 25 days asking you how to use it," he explains. "They're afraid of the learning curve."

Buffamanti, a former technical adviser at Apple Computer in Canada and a senior vice president at MP3.com, says, "The interfaces are still reasonably poor on how to use these products, especially the aftermarket versions. Those are 10 times harder to use."

Dealer vs. aftermarket installation
While Frost & Sullivan finds that 90 percent of navigation systems are sold as a factory- or dealer-installed option, aftermarket products exist to fill in the gaps.

The post-purchase installation is particularly appealing to drivers who want a vehicle that doesn't yet offer the option. It allows the owner to have his car of choice and a navigational system, too.

The same manufacturers produce many aftermarket systems, notes Haynes, and by putting them in later, the auto owner can bypass paying for additional amenities that the dealer bundles with the navigation option. Plus, budget-conscious folks can move the gadget from car to car.

On the other hand, navigation systems must be closely integrated with the vehicle's speed sensor, giving factory versions the edge. Divorce speedometer signals from the equation, and you basically enter tunnels blindfolded.

"There's a doubt whether many people can do [installation integration] effectively," Kaul says.

"The integrated systems can tell whether the wheels on one side of the car are moving faster than the other, and determine that you're going around a curve. That kind of invaluable data is always being processed even if you lose touch with a critical number of satellites," explains Fred Heiler, a spokesman for Mercedes-Benz USA.

And there's one final cost consideration. Regardless of whether the navigation system comes with your auto or you add it later, you still must budget several hundred dollars a year for software upgrades to map road changes.

Julie Sturgeon is a freelance writer based in Indiana.

-- Posted: Dec. 9, 2003