Global Sourcing Service for China,Taiwan,Asia Strategic Sourcing and Procurement Sourcing Provider: Taiwan Makers Urged to Join Global Supply Chain of GPS Devices

From:http://www.ready-sourcing.com/sourcing-news/auto/taiwan_gps.html

Taiwan’s gps manufacturers should attempt to forge a link in the global supply
chain of auto parts by developing the global positioning system (GPS) navigation
business, urged analyst Hung Shih-jieh of the Industrial Economics & Knowledge
Center.

Taiwan’s manufacturers should attempt to forge a link in the global supply
chain of automobile products by developing the global positioning system (GPS)
navigation business, urged analyst Hung Shih-jieh of the Industrial Economics &
Knowledge Center (IEK). The island is already the world’s biggest supplier of
portable navigation device (PND) products.
Huang presented his ideas in a recent article about the global development of
automotive navigation systems, and suggested that local makers of navigation
devices work harder to tap the original equipment manufacturing (OEM) market,
especially in mainland China, in order to improve profit margins and avoid
price-slashing competition.
Huang feels that Taiwanese suppliers should develop partnerships with
international automakers, or with auto producers in China, which has become the
world’s second-largest auto market. One possibility is for them to establish
links with automakers in China (including foreign ones operating there) first,
and then use those links to connect with the global supply chains of
international car companies.
Hung divides the global automotive navigation system market into two major
categories: OEM on-board units (OBUs), which are built into new cars, and PNDs,
which include single-function PNDs, personal digital assistants (PDAs) with
built-in navigation functions, and smartphones with navigation functions.
Prior to 2004, Huang noted, most of the automotive navigation system market
consisted of OEM OBUs with specifications and functions worked out jointly by
automakers and their first-tier parts suppliers. Most of these OBUs were
expensive and included as standard equipment on luxury cars, or were offered as
options on medium- and low-priced cars.
A drastic change came about in 2005, when the PND entered the market with a
much more affordable price tag and a sales boom ensued. In 2006 sales of OEM
OBUs grew 16.2% from the previous year to 7.5 million units, while sales of PNDs
skyrocketed 102.1% to 19 million units.
Global Automotive Navigation Market Forecast (2006-2010)
Both figures are expected to continue growing. OEM OBU sales are expected to
expand at a compound annual growth rate (CAGR) of 11.8% during the 2006-2010
period, reaching about 12.5 million units in 2010; at the same time, PDNs are
expected to grow at a CAGR of 39.2%, reaching 73 million units in 2010.
Hung gives two reasons for the much faster growth rate of PDNs. First, he
explains, OBU prices are too high for sales to grow rapidly, although some
aftermarket OBUs might win popularity as a result of less expensive prices and
better integrity than PDNs. Second, OBUs are optional equipment on most new
cars, except for those sold in Japan. This too keeps growth down.
In Taiwan, GPS navigation devices have developed rapidly in recent years and
are now much more than talking maps. Auto electronics, consumer electronics,
home appliance, information and communications technology (ICT), and telecoms
company have worked together to give them a much more diverse range of functions
including those of MP3 player, digital photo album movie player, and real-time
road-condition receiver. They provide information on navigation, recreation, and
entertainment, all in a single unit.
Hung lamented the fact that only a handful of companies in Taiwan have
successfully tapped into the global supply chains of major automakers. Compared
with OEM OBUs, however, PNDs are developing rapidly on the island. PDN products
manufactured on the island are sold under many world-class brands, including
Garmin, Mio, TomTom, Navman, and Medion.
Major players in the global OEM OBU market include Aisin AW, Panasonic,
Pioneer, Denso, Xannavi, Alpine, and Clarion of Japan; Siemens VDO and Bosch of
Europe; and Delphi and Visteon of the Untied States. Thanks to its position of
leadership in technology development and its huge auto industry, Japan accounts
for about 64% of the OEM navigation OBU market worldwide.
According to Hung, the supply chains of Japanese automakers are often closed
and difficult for newcomers to penetrate. Japanese OBU suppliers have the
advantage here because of their constant innovation, superior quality, and
strong system-integration ability. In addition, most of the Japanese
manufacturers (Pioneer, Alpine, Panasonic, etc.) are long-term suppliers of
car-stereo systems, and as such are already part of automotive supply chains.
(by Quincy Liang, CENS)
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