Frost: Telematics, Infotainment Technologies Boosting Japanese Markets

March 20, 2006

Frost & Sullivan reported several key metrics for the Japanese automotive market, including strong uptake of telematics and in-car entertainment systems. In 2005, Japan was the largest passenger car manufacturer in the world, the second largest automotive market and one of the largest markets for telematics and in-car infotainment (ICI) systems in the world. The industry is expecting even more growth this year with increased revenues from sales of telematics and navigation systems and telematics services.

The market growth in Japan has largely been driven by navigation and entertainment applications, not the safety and security features that are the more popular telematics applications globally. Frost & Sullivan analysts said this is attributable to Japan's inherent and chronic traffic congestion problems to which car navigation systems with vehicle information communication systems (VICS) have proven to be an effective solution.

Navigation systems are the main in-vehicle platform of the automotive telematics industry in Japan, accounting for more than three-quarters of global positioning system (GPS) applications and achieving double-digit growth for five consecutive years. Frost & Sullivan estimates that by year-end 2006, navigation systems are expected to penetrate 50% of new passenger cars, approximately 4.6 million units. The Japanese telematics market, which was at $4.46B in 2001, is expected to reach $8.46B by the end of 2006.

Japanese automotive manufacturers are increasingly featuring telematics systems in their vehicles ahead of the competition, and advanced technology products are commonplace in this market. The evolution from CD-ROM-based car navigation systems to hard disk drive-based (HDD) navigation systems and from analog to digital broadcast makes Japan the most advanced telematics systems market in the world, according to Frost & Sullivan.

The car navigation systems market is dominated by the automotive manufacturers, especially the original equipment (OE) market, said analysts. Major Japanese electronics manufacturers also supply most of the products while other automotive component manufacturers are involved in making in-car navigation systems. The ICI systems market in Japan is in a mature stage of development with 15 companies manufacturing and supplying these systems. The ICI systems market includes multimedia players and rear-seat entertainment (RSE) systems.

Source: Frost & Sullivan.