Embedded navigation in China is thriving, but vehicle manufacturers are not enjoying the results. This is one of the many findings from a recent report published by SBD into the rapidly growing market for aftermarket look-alike navigation systems in China. Demand for these systems is expected to surge beyond 3 million units by 2011, far outgrowing OE navigation which has struggled to make a meaningful impact so far.
SBD has identified a number of key factors that are contributing towards the dominance of aftermarket suppliers:
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Look-alike systems are an average of $800 cheaper than their equivalent OE systems, and sometimes as much as $2,000 cheaper.
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Vehicle manufacturers are struggling to control the sales channel, with almost 80% of dealerships contacted by SBD promoting both OE and aftermarket solutions, or in some cases only aftermarket solutions.
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Aftermarket systems are no longer low-feature alternatives to OE solutions. In many cases aftermarket suppliers have achieved greater success than vehicle manufacturers in developing more appealing solutions specifically for Chinese consumers.
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Aftermarket suppliers are ambitiously deploying telematics services to compete with OE services that have been launched by vehicle manufacturers. In order to overcome many of the barriers, a number of aftermarket suppliers are also in advanced discussions to collaborate towards deploying common telematics data centres and call centres. If successful, telematics would cease to be a unique selling point for vehicle manufacturers and could quickly become a commodity.
If aftermarket suppliers continue to dominate, vehicle manufacturers risk losing more than just the revenues from the fastest growing navigation market in the world. The control over the consumer experience of in-car infotainment (and all the associated branding and CRM benefits) is also at stake.
China is challenging every pre-conception that the automotive industry has about the navigation value chain, and SBD believes vehicle manufacturers can no longer afford to adopt traditional strategies and still expect to achieve favourable results. Success in China will rely on vehicle manufacturers adapting to new technologies, new business models and new partnerships.
SBD's report Look-alike aftermarket navigation in China and counter-strategies for OEMs analyses the key risks faced by vehicle manufacturers and how they can avoid these. If you would like to receive more information about this report please contact Juanita Appleby on jappleby@sbd.co.uk