Navigation Systems Hurt Resale Values

Navigation

We knew it. Well, a few of us talking in the office kind of guessed it, but now we’ve been proven right. What were we right about? Those expensive in-car navigation systems actually lower resale value, according to ALG. American Honda Finance also shows that navigation-equipped used models are worth 1% less than non-navigation-equipped models, even though the option is roughly $2,000 when added to a new-car price.

The reason? Technology. Or, more importantly, how rapidly technology advances. The proof is in the booming portable navigation business: Companies like Garmin are seeing huge profits with their latest miniature units, which come equipped with Bluetooth, MP3 capabilities and more for under $1,000. Some models even cost less than $200, and they can be easily updated. Think of how outdated built-in car phones were not too long ago. That same stigma could be attached to current in-car navigation systems.

Hyundai is one automaker that thinks factory-installed systems are on the way out, and the recent Santa Fe we tested didn’t have one as an option. Luxury companies like Acura say they’re sticking to the in-car systems because people expect the option in a luxury car, and the thought of a small unit stuck to the window is displeasing.

We suggest car companies start building in “cubbies” that will properly fit and display portable devices, whether they’re aftermarket nav systems, MP3 players or PDAs, if they don’t offer a navigation option. What do you think? 

In-Car Navigation Takes a New Turn Amid Resale Woes (USAToday)

By David Thomas | May 9, 2007 | Comments (36)

Comments 

Brian E

I chose not to get the built-in system in my Acura. I couldn't convince myself that the $2000 integrated unit was $1800 better than a $200 standalone unit. Sure, the built-in system would let me set the fan speed and temparature of the climate control with voice controls. I guess you need that when all the controls are integrated into one system!

What's annoying to me is that carmakers don't even show a picture of what the car looks like without the nav system these days. If you dig hard enough you can find one picture of the TSX sans navi, buried in a feature overview. Since the nav system tends to radically affect the dash layout, this means there's no good way to see what the controls look like short of finding one at a dealer.

You're right on Brian. In some cars it is a radically different look, in others they keep a large monitor even without the nav, but that's more rare these days.

Zerf

The one argument my wife and I have always had against them besides cost is we have 3 cars and with our portable we just put it in the car we need. No sense in being limited on the car we can take by the one we equipped with it. We have not run into the case where we both need it at the same time anyway but for the difference in price we could buy two and have ~$1500 left over.

I am also part of the group that does not mind the old HVAC controls where I do not even have to look to set it, I can do it by feel. Most of the nav systems as Brian pointed out you need to use the touch screen or voice if you are lucky.

Amuro Ray

Come on guys (or if there is/are/will be gals around), one thing that you must remember is the "COOL" factor - vehicles that come with GPS installed are easier to tell - now this has NOTHING to do with the selling price, and this article is correct. It's easier to sell, but buyer of the used vehicle will probably factor in a very small portion to the overall purchase price of the vehicle, if it's equipped with GPS. As a result, easier to sell, but at a lower then seller expected price, thus lower selling price/greater depreciation.

Another issue that you need to think 'bou is that, yes, portable are cheap & easy to move around, but they have been the target of many car break-ins recently. In fact, my co-worker's got broken into 'coz of this reason. With pre-installed GPS, you don't have to worry 'bou this.

Finally the big screen is actually very cool! For vehicles like Nissan & Infiniti, you can actually do air-conditioning/Hybrid monitoring, and rear view monitors on the same thing! VERY, VERY COOL!

Amuro Ray

Sorry, typo above:

easier to "sell," not to "tell," and I mean for both used and new vehicles.

lower "than", NOT lower "then"

Dan

I can see this. I can imagine a large part of the over 40 crowd not being interested. Infact, the reality of being forced to learn a new system just to adjust your fan controls would be a real turn off to many boomers. Many individuals set in their ways would see this as a reduced functionality of the vehicle. While the look does clean up the dash some, there is the loss of (as mentioned above) the "adjust by feel" capability.

starlightmica

Let's not forget the cheaper 2 DIN aftermarket nav systems. Pioneer's AVIC-D3 is going for $1000 installed this week at a certain big box store if you really want an in-dash setup, and there are options such as backup camera and steering wheel button adapters if you're in need of those, too.

--
cut here

Dave T. - can you delete my previous duplicate entries? Trying to remove my email address - thanks!

Actually, we have to clarify something: Cars with nav are not worth less than those without. They depreciate faster, which means the value of the option drops more than the car overall. As explained in the USA Today story, a $2,000 option may end up adding only $600 of value at resale. Navigation systems are not a scarlet letter that makes any model with them worth less than those without.

That said, I think the optional types need to go too. I evaluated early navigation systems 15 years ago, and they cost $2,000. After all this time, the maps are better and the interface -- in some cases -- is better ... and they're still $2,000. Inexcusable. I'd rather pay hundreds for an aftermarket unit and leave rearview cameras to the automakers, also for a few hundred, not a few hundred on top of the price of the navigation system. Toyota's execution leaves something to be desired, but at least they're starting to offer the backup cameras as a cheaper, standalone option.

Is anybody using the gps/map part of the nav system everyday? How often do you really need it? I checked out the B9 system and thought it was very cool, but I would only need it on a road trip and I don't get to do enough of those. $2000 for a few times a year?!

Amuro Ray

Something to add to my previous post - a study was done ~ 3 years ago, and it was the time when handheld GPS weren't too popular (not really that many at that time, and pretty sucked). In Japan, you can get GPS as an option on "cheap" level cars - like the Fit/Jazz, Vitz (Yaris), Sunny (Sentra) , and such, as a US$200 or so option from the car manufacturer. If I remember correctly, that's due to the US having essentially a monopoly on GPS systems, whereas Japan has a public market. That explained partially why GPS for vehicles were so expensive here to begin with. Furthermore, you've to factor in manufacturing cost - even for today, only a handful of models are equipped with GPS installed from the factory, and so the cost of those special batches are higher. Than you have to factor in the warranty - many of the car manufactureres will give you 3 - 7 years on the pre-installed GPS system, especially if you've purchased the extended service plan. You only get 1 year at most from handheld. Finally, in the US, only the high end models have GPS installed...where do you think the car manufacturers are going to grab their money from? The high-end models are expensive to begin with, and if you can afford one, GPS is like NOTHING :) (Another analogy is that those who can afford luxury vehicles don't usually care 'bou high fuel prices.) In fact, you can use that option to kind of "show-off" to the others like, my high end model is THE BEST you can get...

To me, I totally think that handhelds are better nowadays, but I'm just giving you the reasons why the pre-installed are still popular.

segfault

Putting the shoe on the other foot, a working, well-designed nav system seems like a good deal on a used car. I'd pay $500-600 extra for an integrated system (plus whatever they charge for the map updates). I like my Garmin Nuvi, but it's not as slick as the factory integrated systems.

J

See, if you finance the car with the navi, and compare it to the car without it, the price difference is not only $2000. Plus, we all know that the price is gonna come down QUICK just like how computers, cell phones, digital cameras were.
If I really need a navi, the $2000 can be used to get me an aftermarket one and/or a laptop which definitely has a bigger screen than most factory navi.

Thor

Maybe it is just me, but I still my younger years with old cars and a lot of electric gadgets which didn't work. I still prefer my cars with not many things to break. And I actually can read a map.

Dave

I think all these posts have very valid points, most of which I agree with, however keep in mind that $2000 15 years ago, adjusted for inflation (and the fact that the average
American household makes more than they did a decade or so ago) means these units are far more manageable financially than they've ever been (the cost, comparitively, has come down). In response to the AVIC-D3 post, for me to add an OEM-looking aftermarket system to my vehicle (we're not talking about $200 handhelds here) I would pay out of pocket to the tune of $3-4K to replace my OEM premium audio equipment which would no longer be compatible. You do the math...it comes cheaper from the manufacturer. My wife and I have sworn not to buy a new vehicle w/out a nav system ever again, mostly b/c we feel that this should be a standard item on any well equipped vehicle sold today. I consider this in the same vein as the CD player was in the 80's and 90's. Try to find even an entry level compact car w/out at least a single disk player these days when they were a lux item in vehicles only a decade ago. Not only are these systems here to stay, but can be expected to improve in time until replaced by something better.

Ken L.

I am not for factory installed navigation units and the reasons are simple:

1) Park a car on a sunny day and the Navigation system will malfunction over a short period of time due to constantly being exposed to high degrees of heat. It’s also true if you live in extreme cold climates. After all, these are sensitive electronic devices and will fail sooner or later.

2) Also mentioned earlier, the price, the feel of a mechanical switch on the dash, not needing GPS everyday (unless you’re in the livery business), higher contents with aftermarket units, etc..

3) Last, but not least, I have tomtom Navigator 6 installed on my MDA phone and this baby rocks. Much better and than the bulky portable units since this is my phone and I carry it with me at all times. Plus, it’s extremely accurate. The only other device you’ll need is a Bluetooth GPS receiver, which is the size of a pack of gum.

Amuro Ray

Ken L., I ain't too sure 'bou your point #1. In fact, it can be disproved very easily. I used to own a vehicle with factory pre-installed GPS. 5 years, rain or shine, hot (100+ F max) or cold (close to 32 F, min), not a single issue with the GPS system.

Another point I should have mentioned is that many of the factory pre-installed GPS now gives you traffic info, such as where the congestion is, any accident on the road, etc. It's definitely NOT feasible or practical to remove or mod your center console to install a GPS, as Dave has mentioned; it often involves removing some OEM stereo (and expensive) system. And finally, using a map is ok - if you know where you are, or you've someone who knows how to read map in the passenger seat.

All in all, yes, aftermarket are cheap, but if you want to buy an aftermarket WITH the same level of "sophistication" as a factory one (like those in Infinit & Lexus), with the rear view monitor and the car battery system (for hybrid), the price difference would be much closer already - may be several hundred bucks....

Then again, for me, I would go buy a cheap aftermarket; but if I've plenty of $$$, factory pre-installed I'll have for sure :)

James

I never really thought about the fact that the nav. system would be like a computer,cellphone etc. and as years go by there will be newer and better technology.
For myself, I have always said my next car will have naviagation as I get lost easily, I admit it, until I go somewhere at least 3-5 times in the daytime and up to 10 times at night, then it sinks in, but I know back in 2005 when I visited my dad in virginia it was my first time alone driving out of Buffalo Ny through several different states, and I know a navigation system would have made my trip much easier.
Like a few people above mentioned, I would pay the extra $500 or whatever the price as long as it wasnt $2000, on a used car with the system.
Next July my lease is up, and I know that I wont be able to get a new car this time due to stupid money mistakes from my early years, but I do want the car to have the nav. system, a few years ago, my friend and I went to the car show here in Buffalo ny, I have been going to them for over 20 years, but it was his first time, he sat in a Lexus 300 and he fell in love with it, his car was a 2000 Ford taurus, and I remember we both dressed up, so the sales people would give us the time of day, at the lexus dealership, he found the color he liked, and it had a naviagation system, and we both loved the system, and the salesman showed us how to use it, and he put in several different addresses, and it worked fine.
But I do have a concern about those smaller units, I am not sure about the states where everyone else is from, but I know in WNY that driving with a cell phone is illegal, I could see the possibility that those little units could become illegal,if someone is paying too much attention to them and not the road.
Just my thoughts

Juan Carlos

the would be true for all of them. and another thing, one could put in systems in the dashboard that are million times better or good enough and cheaper, but it could void the warranty.

and don't forgte that getting that gps system will not only cost you an additional 2k, it may force you to upgrade trims.

Joe Isuzu

The only car where I would want a sat/nav would be in a Mini S
because it pushes the speedo back to over the steering wheel.
But I belive it is 1800.00 bucks!

Telemetrics for cars is the wave of the future and no one - not even MB or BMW can touch GM's On Star. Now you can go w/o that costly and sometimes unsightly in-dash unit.

The latest option called "Turn by Turn" is just excellent. You pay a small monthly fee (you can actually subscribe to short periods if your a cheapie), tell the On Star assistant the address and voila, 30 seconds later you've got your directions. No crowded dash, no reflective glare, voice driven and voice directions, instant human assistance if needed.

I'll never have another in-dash unit. Garmin -yes- great for the cycle, or non Turn by Turn capable cars.

BTW, the built-in On Star cell phone is also excellent, reliable and hands free - much better than most implementations of blue tooth. And I like the email my car sends each month listing the status of electro/mechanical components plus miles before oil changes, etc.

Telemetrics is the way to go - including directions for your trip.

Out-dated

I feel really left out. I don't even have a CD player in my car...

Me

I use mine all the time and wont ever buy another car without it. Cars all depreciate - no matter what options you have or dont - so a nav system doesnt hurt the value of the car. The meaning of depreciation is being taken out of context. To mitigate losses - you should always buy "loaded" with every option cars between one and two years old with low miles. Cars are a necessary evil - you lose money no matter what, but you don't have to pay top dollar for technology.

Hey Me,
Don't you think if you took the $2,000 and instead of getting nav you got a moonroof, heated seats, and an upgraded stereo you'd have better resale?

I went on a trip last week. Logged on to Yahoo maps, punched in the starting address and destination address. Printed the map and directions. Cost of the printout was less than $0.05. The printout was very convenient. I was able to effortlessly move it from one car to another - even my grandmother could do it too! At $0.05 per trip for a map printout, I'd have to take 40,000 trips to spend $2,000. 10 years ago, I bought a map for $2.95. 10 years for $2.95 on navigation. Imagine that...

Ken L.

Well, let’s all hope for those of you that favor, and currently have factory installed GPS units, that it does not get stolen. Otherwise, besides the GPS, there goes the radio, AC control units, and countless other functions that car companies program in that integral unit. Oh, I’m almost positive it’ll cost more than $2000 to replace, not including installation. That's how they get you now and days since most cars are quite reliable mechanically.

marty g

I bought a used "Certified" Lexus 330 from the dealership. It came with a navigation system. After a particularly hot day, afer getting back into the car, my son pressed the Enter button on the navigation screen. It didn't respond so he and I went back and forth pressing the enter button. The screen cracked over the site we pressed.
Although under warranty, Lexus says we broke the system by hitting with an object. Has anyone heard of the touch screen cracking?
Also, anyone know what brand navigation system Lexus used in 2004 (age of car)?

Greg

Much like other options that do not carry their own weight at trade-in time (think custom wheels, body kits, etc), navigation systems add an optional degree of functionality and desirability to the owner that chooses to add them. At that point, it is the buyers peril to add something like navigation on to their car. I have an 06 Acura TSX and love the navigation function, as well as the touchscreen radio interface. Sure, it cost me $2,000 but for me, it was well worth it. In the end, its a matter of what the consumer wants and their willingness to pay for it. If you like portables, good for you

I considered the portable units, but security and asthetics came into play. It looks good, works well, no extra wires running around the interior of my car. Portables are generally more upgradable, but navi systems are not on the same evolutionary curve as other items, such as cell phones. Cell phones show real functional improvement every 6-12 months. As for navi systems, other than user interface improvements (which is more brand specific than age related - a new toyota system is ancient compared to a used honda system), they are designed to show maps and directions. New map discs usually expand out to places where noone lives anyway and although I wish I had traffic routing, when I have driven cars (2007 Acura loaners and Avis rentals) that have the traffic warning system, I didn't find it all that useful. I live in Atlanta...traffic is everywhere, all the time!).

If you want real cost/function/update/upgrade optimization, get a Blackberry Curve with built in GPS and add the $10/month unlimited use Telenav service.

Beyond that, I find it amazing that some of us can be so critical of someone for adding on a functional device that has a minor impact on resale, but there seems to be much less problem with those that buy speicalty cars that depreicate 30%, 50% or more within a year or two of purchase! Even worse, we'll bash a functional option that may not carry it's own weight, but doesn't negatively impact the trade in value, but we'll continue to buy certain "affordable" (read american/fleet bound) models that have the same miserable depreciation rate as the high-end mercedes amg models...those are the true wastes of money!

I was just looking at the new Civic EX-L and was considering the navigation option. It's nice to have, but for me, I'd rather put the extra 2k towards the down payment.

I love my Navman since it allows me to take it with me when I rent rental cards.

gary

I really like the factory dvd navigation system in my lexus. I have seen other people's portable handheld gps systems but I would think about how they look stuck to the windshield or the dash. And it is possible there might be more car break ins to steal them in the future. Just awhile back cars were being broken into to steal iPods. Getting a factory system like in my lexus out of the dash would be more than a 1 minute smash and grab, and even if they did get it out of the dash, what have they got? Not a navigation system, the data is all on the dvd drive that is bolted to the car in the back under the carpeting and spare. All they've got is a screen.
I missed my gps navigation system when my lexus had to go in for a dented front bumper, and the rental car I had, a 2008 Chrysler 300, didn't have one. I missed the climate control too. The 2008 Chrysler had a hvac system one could adjust "by feel" I guess, but it was just a slider with blue on one side and red on the other and a fan speed control. Those you may have to adjust a lot, but in my lexus, I just set the climate control at 70 and forget about it. It keeps the interior at 70 so I don't have to go adjusting it all the time. And having the radio on it too is great, adjusting sound levels, balance front rear left and right on a displayed grid where one can just drag a finger to set it.
And I have updated my navigation system, by buying a new dvd disc from lexus, around here the city is in a valley between two mountain ranges and is growing out and up the sides of the mountains, whole developments and street addresses that weren't here a year or two ago. So updating is not really a factor so much between portable GPS units and factory installed ones.
I like integration.

Mark

I think this is a case of haves-and-haves not. We will never have a car without a factory nav system. We have a Cadillac and a Volvo adn recently sold a Nissan. All with factory nav. If you use them, and want your car to be clean, then you would not accept the small, limited, ugly nav stuck on your windshield. Do we use them on every trip? No. But we use them almost daily when traveling to a new destination (Dallas is very big) or looking for a POI around the car or along the route.

Tack on nav? Never. The $1600 to $2000 price tag is worth it. My time is worth it. $30 a month for a better system that looks better? No brainer. And, no, we don't finance our cars, but we do keep them for about 4 years.

Tearanew

Because money is not an issue (at least in the when we're only about a few thousand dollars), I have both. Simple as that.

Alex Penn

HI ,

We are a taxi company Hummingbird Cars in London. We provide Airport Transfer service from all london airports.
We have recently started our new business and we require to buy Car navigation system or Tom Toms for our taxis . Can anyone suggest which type of navigation system and company is the best and where we can get the best deals.

http://www.hummingbirdcars.com

Thank you

Kevin

I have MB and it did not come with one. So I got a Garmin and I think it makes the car look cheap.

andrew Cherouvis

I have a 2010 Infiniti m35x with navigation. I have to admit the navigation system is very limited when you are driving. Many of the functions of the nav system are not available to the driver when you are driving. Often you need to pull over, put the car in park in order to access the POI's. I recently purchased a new KIA optima and opted not to go with the Nav system and sav the $1000 dollars and use the telenavigation on my phone.

Art

@JoeWiesenfelder: You said "we have to clarify something", but a comment is NOT the way to do that. The title and text of the article itself is *completely* misleading, and only a small fraction of readers bother to pore over comments to look for retractions. You're spreading a completely WRONG idea -- that cars with GPS are worth less than cars without. Shame on you for not retracting the article's title and text entirely -- or rewriting it so it leads with your explanatory comment.

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