Stung by the popularity of cheap smartphone navigation apps, aftermarket suppliers of personal navigation devices are starting to market navigation systems directly to automakers.
The biggest player in the aftermarket sector, Garmin International Inc., has developed systems for Chrysler, Suzuki, Volkswagen and Mercedes-Benz. TomTom NV, another major player, has rolled out navigation systems for Renault, Toyota and Mazda.
Declining sales of personal navigation devices prompted the two companies to change tactics, but it's not clear whether TomTom and Garmin can expand in a market dominated by companies such as Panasonic, Pioneer and Harman International.
Garmin, the world's leading producer of personal navigation devices, has had some success reinventing itself as a supplier of original equipment. Last year Suzuki introduced Garmin's factory-installed head unit featuring a nav screen, radio and Bluetooth connectivity. But Suzuki left the U.S. market a few months later.
Garmin also developed navigation software for Chrysler's U-Connect, a system that drew praise for its intuitive controls. And in June, Volkswagen introduced a Garmin portable navigation device for its VW Up hatchback.
And at the 2013 International CES, the big consumer electronics trade show in Las Vegas, the company displayed its K2 cockpit concept, which included many infotainment features.
"We see ourselves as a Tier 1 supplier that provides the full package" of infotainment, said spokesman Johan-Till Broer. "We've shown we can go in both directions" by supplying infotainment software, hardware or both.
But Garmin's initial successes in the automotive sector have only partially compensated for plunging sales of personal navigation devices.
In its second-quarter earnings report, the company's automotive/ mobile division, which markets original equipment and personal nav devices, reported global sales of $345 million, down 12 percent.
Industry analysts are debating whether Garmin's expertise in navigation is enough to expand its infotainment niche.
Old-fashioned navigation, featuring route directions from point A to point B, has become a commodity, said Praveen Chandrasekar, a tele- matics analyst with Frost & Sullivan.
"The A-to-B route guidance function is way too mature and way too easily cracked by everyone," Chandrasekar said.
But Mark Boyadjis, a senior analyst for IHS iSuppli, says Garmin's intuitive controls are a real advantage at a time when many motorists are turned off by complex infotainment controls. "They have a simple user interface," Boyadjis says. "In the U.S., motorists want simplicity. They want large screens and simple texts."
Do aftermarket suppliers such as Garmin have the resources to challenge established infotainment providers?
At this early stage, Garmin is still a niche player. According to an Aug. 30 report from IHS, Panasonic was the world's largest telematics provider last year with infotainment revenues of nearly $4 billion.
Pioneer was the second-largest provider, followed by Harman International, Continental AG and Alpine. Garmin was in 8th place, while TomTom was not in the top 10.
"Both Garmin and TomTom suffered sizable losses as the once-hot [personal navigation device] market has been reduced to a shadow of its former might," the report noted.
With industry revenues estimated at $34.6 billion last year, the infotainment sector is attracting a variety of consumer electronics manufacturers, the IHS report notes.
To attract more users -- and win over the automakers -- suppliers are promoting features such as real-time traffic guidance, parking assistance, gasoline pricing and three-dimensional maps.
But it's not clear yet whether most motorists will choose all those features instead of an infotainment system that is simple, intuitive and reliable.
Says Boyadjis: "Suppliers that perfect the simple functions of navigation are the ones that will win."