Findings from the recently published Semicast report  "Automotive Entertainment Systems"  suggest that future revenue growth in automotive entertainment will be led by embedded navigation systems.

Historically, audio-only systems have been most common in cars, with AM/FM radio, CD and cassette playback the bedrock of the market. However over the last ten years, a steady rise in the complexity and functionality of automotive entertainment has led to growth in shipments of front seat infotainment systems, which bring video playback to the driver and passenger; rear seat entertainment systems, which bring video, TV and gaming to the rear seat passengers; and embedded navigation systems, which use GPS location and on-board digital maps to guide the driver to their destination.

Colin Barnden, principal analyst with Semicast, commented  "This rise in technology has started to squeeze traditional audio-only systems quite literally off the dashboard and out of the market" . Revenues for embedded navigation systems (excluding portable navigation) are estimated to have passed those of audio-only systems in 2007 and are forecast to grow steadily in the long term. In comparison, revenues for audio-only systems are forecast to decline, as drivers increasingly adopt either front seat infotainment systems, or embedded navigation systems, which integrate the audio functions.

Japan has historically led the market for embedded navigation systems. However as new vehicle sales in Japan stagnate and factory installation rates of navigation systems reach saturation point, West Europe is forecast to take over as the largest region. North America is also showing a rising demand for navigation systems, although a substantial number of North American drivers (in particular in the US), are forecast to continue to use telematics services (such as OnStar from GM and Assist from BMW), which will detract some demand away from navigation systems.

In comparison, North America is forecast to firmly establish itself as the world leader in rear seat entertainment systems and by 2015 is forecast to account for around one-third of global demand. North America is especially well suited to rear seat entertainment, with such a well developed market for SUVs and minivans, which are the two main segments adopting such systems.

While revenues for audio-only systems are forecast to decline steadily over the period to 2015 in North America, West Europe and Japan, China is forecast to support units and revenues throughout the long term. New light vehicle sales in China are rising faster than anywhere in the world, from around 7.5 million this year and are forecast to rise to over 14 million in 2015. The vast majority of these vehicles are forecast to adopt audio-only entertainment. Indeed, the growing importance of China to suppliers of audio-only systems should not be underestimated; China accounted for only around 10% of factory-fitted audio-only systems in 2007, but in 2015, it is forecast to be closer to a quarter, with shipments exceeding those of North America, Japan and West Europe.

Supply of automotive entertainment systems continues to be dominated by a relatively small number of suppliers. Delphi, Siemens VDO and Visteon were judged to be the leading global suppliers of factory-fitted (OE) systems in 2007; Alpine, Pioneer and Sony were judged to be the leading global suppliers of aftermarket systems.