Factory Navigation System Pricing

We visited three car dealers today: Mazda, Honda, and Subaru. All three of the manufacturers have priced their factory navigation systems at $2000. Selling a $100 product for $2000 should be yielding tremendous profits for these guys… except that none of the dealers was interested in selling it. “I tell all of my customers to go to BestBuy instead of spending $2000,” the Mazda sales guy noted. Among all three dealers there might have been two or three cars in inventory with factory nav.

We saw no cars with an RFID key; all of the cars had mechanical keys that you turn. We saw no cars with navigation, and certainly none that had replaced the dashboard real estate consumed by the tach and speedo with a flexible LCD screen including nav. We saw no cars with remote start. We saw no cars with any ability to use WiFi or a 3G Internet connection. We saw no cars that could accept a music input via Bluetooth.

I’m wondering now if the inability of mainstream car manufacturers to take advantage of modern electronics is harming their profitability. Since the cars themselves mechanically are not very different from a 5-year-old car, and the electronics are the same as those on a 5-year-old car (unless the consumer wants to spend $5000 extra), a lot of potential customers will decide to keep their 5-year-old car. Since all of companies seem equally unable to do anything interesting with electronics, it might seem that incompetence with electronics/software is not a competitive disadvantage.  But the car companies still have to compete with the cars that they made five years ago. And the Chinese and Indian new entrants to the market might prove more innovative.

14 Comments

  1. Scott

    February 14, 2010 @ 10:17 pm

    1

    There are plenty of electronics available – my wife just got an RFID keyed Toyota Rav – but why buy inevitable obsolescence at the obscene markups that car companies charge for it? The service life of the vehicle will see several generations of upgrades and improvements, and it would be annoying to be locked into 2010 technology with a 2015 nav capability available, particularly when the in-dash versions offer little to differentiate them from the portable versions.

    The oldest vehicle in our “fleet” is a 1996 Ford truck and it still has a cassette deck (which I ordered since you couldn’t get audio books on CD at that time) – the unintended payoff is that it’s been easy to adapt to an IPod, but think about it … in the service life of the vehicle (~14 years) the audio world has gone from the end of cassettes, to CDs, to downloads and satellite radio. Effectively three whole generations of technology.

    When my wonderful $160 GPS dies or becomes obsolete I’ll sell it on Ebay for a few dollars (or use it for something else) and upgrade, rather than watching the $2,000 widget in the dash get older and begin to break down. Further, I can take it with me when I travel and use it in rental cars, loaners (and the occasional boat).

    I think that automakers offer quite a bit in the way of user electronics (don’t forget the amazing networked multiprocessor devices that cars are under their skins now) but consumers recognize the difference between the longer term investment in vehicles and the short, marketing driven life cycle of consumer electronics.

  2. TimG

    February 14, 2010 @ 10:21 pm

    2

    I couldn’t agree more with this post.

    I bought a 2007 Accord new three years ago which I was very happy with. Due to an accident, I had to by a new car this January. I looked at new cars, but I ended up buying a 2006 Accord.

    I’ll be honest, I didn’t really like the dash styling of the post-2008 accords. The only significant electronics “improvement” on the standard models was an aux audio input. I really would have liked a BT phone capability and built in nav, but I wasn’t going to pay Honda’s premium, so used was an easy decision. I have looked into third party kits, and I’m sure they work fine, but they still seem awkward to mount. I imagine/hope, at somepoint, Honda will deliver a replacement radio upgrade, that incorporates, HD radio, BT, and a nav screen in an attractive package.

    As to why they do it, I’m sure its a business decision to differentiate their premium brands (Acura has BT standard). I first saw car BT in my friends entry level lexus (~30K) around 2005ish, and the new entry level lexus has BT standard and portable audio players can be controlled through USB or BT. Why buy a used Acura TSX (the most common car my friends got after grad school) if a new accord has better electronics?

    A couple other notes, I thought about giving ford a chance mainly because of what Consumer Reports said, but I never made it to the dealership. I didn’t think about any other American cars. I also looked at Subaru specifically for AWD, but decided I wouldn’t use it enough. I’m single with an income of ~120K in a moderately priced state and paid in cash. I don’t see things improving for the car industry.

  3. Dave T

    February 15, 2010 @ 12:10 am

    3

    I stay away from built-in navigation and DVD simply because upgrading would be really painful. Now, if there was a standard screen and you could buy off the shelf cards that did navigation, WIFI, etc… that would be cool.

    As for DVD, a single DVD doesn’t really work well when you have multiple kids of different ages. Instead, we have a $80 portable DVD player (working fine for several years) + iPod with videos.

  4. Anonymous

    February 15, 2010 @ 8:03 am

    4

    As is the case with piston airplanes, the only substantial difference between a new car and one that is a decade old is the navigation system. Unlike in the case of airplanes, a superb navigation system does no add much to the utility of a car. Only when cars are radically different (electric) will the ancillary elements of the car be truly modern.

  5. John O.

    February 15, 2010 @ 8:43 am

    5

    I agree with Dave T about the pain of upgrading.

    I’m still driving my 1999 Saturn. The only thing still in service from my 1999 desktop PC are the case and floppy drive. Navigation systems, BT, and LCD screens have all seen major improvements in the past 5 years, so a 5 year old car could have electronics that are horribly out of date.

    Just give me an aux input (that I can feed from an iPod or whatever replaces it at the top of the heap) and a dash mount for an Android phone (with point to point GPS). I can then replace the functional bits without taking apart my dash. I can also take them with me when travelling by bus, bicycle, walking, or my friend’s car.

  6. Jim Howard

    February 15, 2010 @ 2:03 pm

    6

    I think the Ford Synch radio will do everything you want with respect to music players and smart phones.

    I’m pretty sure it will catalog and control your smart Phone via bluetooth, and I know from using it that it can control a Motoroloa Razor via bluetooth and an iPod via the usb socket in the center console.

    It’ll also do all kinds of other things, such as get traffic, weather, sports scores, suggest directions, and call 911 if your airbag deploys.

    The nice thing Ford did was include the full Synch functionality without having to buy the $2000 nav system, even though the Synch includes a gps. The basic Synch UI is an easy to use two line florescent alpha display and an excellent voice command system which is easy to use.

    The Ford/Microsoft Synch is a whole new class of device, calling it a ‘car radio’ way understates what it does.

  7. Neil W.

    February 15, 2010 @ 2:08 pm

    7

    I have two cars with built-in nav because both were purchased used. In the case of a used car in a down economy, this wasn’t a bad deal. I like the experience of using an in-dash nav with steering wheel control, voice commands, a large screen, and automatic mixing of guidance information with my audio system, compared with the experience of having a tiny, autonomous, external box. With that said, I’ll pay very, very dearly if either of these systems ever fails, and we’re stuck with BMW’s awful UI (and exorbitant price for DVD map upgrades) on one of them. My 2007 Accord doesn’t have music input, so despite having their top-of-the-line Accord from ’07, I still have to use an FM transmitter to interface my phone and music player to the car. The major technological advance of an 1/8″ stereo input jack was introduced in 2008. I expect that Honda will keep Bluetooth for the Acura crowd for years to come. Another kick in the pants is that even though my fiancee’s 2003 BMW has RDS (radio data system), my 2007 Accord does not, so while my awesome Motorola bluetooth FM transmitter sends track title and caller ID info via RDS, I never see it. This will likely be my last Honda. Too bad it will last another ten years.

  8. scott Seigmund

    February 15, 2010 @ 10:46 pm

    8

    Sucks that it has come to this.

    The twenty something boys who don’t need much money , and pass their time writing about cars would have us believe that whizzy electronic gadgetry is mostly all that mattes in a car these days. With snide arrogance what can only come from hopeless poverty, they gush over grossly expensive European cars, and fawn over the flawless “quality” of Asian cars. American cars? Whatever.

    The BMW X5 I recently drove has perhaps the most useless array of computerized garbage (iDrive) ever inflicted on the automobile. No need to wait 5 years for it to fail, it doesn’t work now. And while it does work, you probably can’t figure out how to use it. Multiple cameras to “help” you back up? Heck, I can back my boat up on a 25 foot trailer using only a couple of primitive mirrors. I couldn’t figure out how to put the X5 into reverse, and finally, sheepishly, asked the 20 something “salesman” for assistance. Oh yes! That tiny button on top of the joystick thing! If I only had my glasses on, I could have read it for my self. How stupid of me, after 40 years of driving, to expect reverse to be one spot back of park.

    At least the 3.0 liter turbo diesel didn’t disappoint. Stunning performance and superb fuel economy all in a durable package. How does it tow? That question caused two salesmen a half hour of searching through technical publications. Oh yes, if you want to tow a trailer with this $60K marvel, the tow hitch is going to cost you another grand. The Washington D.C. area dealer had never sold an X5 with towing equipment I was told. More to my dismay, their responses to my very practical questions made me feel like an idiot. A week later I got a phone call from BMW to find out why I didn’t purchase a car during my visit, to which a gave three simple answers.

    1. I don’t want to consult a manual to figure out how to adjust the radio and air conditioner.
    2. I don’t want to spend thousands of dollars for features that I won’t ever use or can’t figure out how to use.
    3. I don’t want to pay thousands extra for the few features that would make the car useful to me.

    I should have added that I don’t want to feel $crewed by a bunch of tech savvy slicksters.

    Cars are not fun any more. Like the orgazmatron in the movie Sleeper, they might ‘get you there’ but you probably won’t have a warm fuzzy feeling when its over.

    iDrive? Gimmie a HEMI any day!

    P.J. O’Rourke had it right.

    “It’s a tragic romance, whose magic was killed by bureaucrats, bad taste and busybodies.”

  9. benc

    February 16, 2010 @ 8:50 am

    9

    Interestingly, in my recent car search I found that American manufacturers had the most gadgetry in the latest models (aside from luxury classes). Toyota is lazily behind, Honda cars still look like 1993, Subaru is getting there but still feels a little ‘Playskool’ to me.

    In contrast, Ford/Microsoft sync comes ready to integrate simply and effectively, and I was surprised when the GMC envoy I was looking at came standard with remote start and bluetooth.

    I’m not saying that the tide of innovation has turned, but people just outright fail to consider US-made vehicles. I was pleasantly surprised.

  10. GB

    February 16, 2010 @ 11:40 am

    10

    I’ll be happy when we have USB ports to power our portable accessories with. The cigarette lighter as a power source needs to die- yesterday.

  11. KAJ

    February 16, 2010 @ 7:00 pm

    11

    On its way? (PR link)

    —————————-
    Visteon Launches “Virtual” Instrument Cluster on 2010 Range Rover

    VAN BUREN TOWNSHIP, Mich., July 27, 2009 ― Global automotive supplier Visteon Corporation has launched a reconfigurable cluster platform on Jaguar Land Rover’s new Range Rover – available as a standard fit on all derivatives in Land Rover’s global markets.

    Replacing the conventional instrument cluster design, the reconfigurable 12.3-inch full color Thin Film Transistor (TFT) display integrates multiple functions and operating modes to present on-demand driver information via virtual gauges, graphical displays and a message center. Developed for the 2010 Range Rover model range, this is Jaguar Land Rover’s first “virtual cluster” application.
    http://www.visteon.com/media/newsroom/2009/090727_story1.html

  12. Dave

    February 17, 2010 @ 3:33 pm

    12

    this is apparently a picture of what KAJ is referencing

    sweet, now instead of an actual giant tach you can have a virtual giant tach, PG!

  13. Jim Howard

    February 18, 2010 @ 7:56 pm

    13

    GB, most Fords have a usb socket in the center console, along with an aux input jack and 12v cigar lighter plug.

  14. Mosen

    February 19, 2010 @ 4:39 pm

    14

    Great comment Scott Seigmund. I’m 20 something and completly agree with you. Cars have become very complex status appliances and it seems that you have to go out of your way to derive utility from the technology you begrudgingly paid for.

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