In-Car Navigation Goes Smart

The boom in smartphones and improved map accuracy of embedded in-car navigation solutions provided by OEMs has made it a challenging environment for manufacturers in the in-car navigation aftercare market. I recently had the opportunity to speak with Mr Cees van Dok, the Global Director of User Experience at TomTom International BV about the shift in consumer trends and how the company is evolving its business to get ahead of these changes.

Developed markets will sustain demand

Despite the tough market dynamics, Mr van Dok continues to see the relevance of the aftermarket for in-car navigation devices in developed markets. This is also the area in which TomTom will be placing its bets in the aftermarket going forward. Based on Euromonitor International’s research, overall in-car navigation is expected to continue to decline at a CAGR of 6% from 2015 to 2020 across all regions. As a mature product category, generating high growth rates will be difficult.

Going forward, Mr van Dok believes that developed markets will offer the greatest opportunity for the in-car navigation aftermarket. Although smartphone penetration rates are equally high in these markets and maps on smartphones are usually free, the company still sees a healthy pool of consumers who are replacing or purchasing new navigation devices. Consumers who fall into this category tend to have a stronger sense of attachment to their smartphone. They prefer to have their phones by their side to check on messages and calls when the car is stationary instead of docking it to use as a navigation device which limits its functionality.

Turn-by-turn navigation no longer critical

Mr van Dok also noted a shift in consumers’ expectations of the functionalities of their portable navigation device. In the past, the turn-by-turn navigation capability of in-car navigation devices was the key selling point. But in today’s context, most drivers are only using the turn-by-turn functionality as a backup. Moving ahead, Mr van Dok believes that functions such as real time traffic information, suggestions on the best route with clear traffic conditions and expected time of arrival, will grow in importance.

Based on Euromonitor International’s survey conducted in May 2015, the feature which 85% of respondents were most interested in in terms of navigation devices, was being able to identify traffic situations and suggest alternative routes. In many developed countries, owning a car is seen as a necessity rather than a luxury. Drivers become familiar with their routes and are less reliant on turn-by-turn navigation. On the other hand, traffic congestion is often unpredictable and having access to real-time traffic updates would improve the drivers’ experience.

TomTom International BV’s map-making approach


Source: TomTom International BV

Going smart

The future of the automotive industry lies in the autonomous car and precise mapping, and GPS technology will be a key piece in the puzzle. A prime example of the importance of accurate mapping would be the acquisition of Nokia’s HERE maps by car manufacturers, AUDI AG, BMW Group and Daimler AG in 2015. TomTom also announced a partnership with Bosch GmbH in July 2015. As the industry strides ahead with the autonomous car, there is an impetus for embedded in-car navigation to go smart.

While many of the new cars come equipped with entry level embedded navigation capabilities, these are often provided at an additional cost and are cumbersome to update. The convenience of having to only pay a one-time upfront cost for GPS navigation will still drive consumers to purchase a navigation device in developed markets. In order to remain relevant, the next generation of in-car navigation needs to be contextually aware of the driver’s personal schedule through connection with the smartphone, and provide alternative solutions based on current traffic conditions. TomTom’s recent launch of the new transactional-based mapmaking platform which provides real time map updates for drivers is a step forward in the right direction. As a company which has strong roots in GPS mapping technology, TomTom is well positioned to capture the next wave of growth in connected cars as it ventures into this emerging category.