NVIDIA Partners Honda, To Offer In-Vehicle Systems by 2015
NVIDIA Corporation’s (NVDA) success with its Tegra processor continues. Presently, Honda vehicles are set to launch a new in-dash Infotainment System driven by NVIDIA’s Tegra mobile processor. Honda's latest in-car audio and infotainment systems will be included in Honda Civic, Civic Tourer and CR-V models, scheduled to be available in Europe in 2015.
NVIDIA Tegra processor, being more energy efficient, provides a longer battery life. With access to the most advanced automotive-grade products, the mobile processor will help car manufacturers to bridge the gap between consumer electronics and in-vehicle systems. This, in turn, is expected to benefit NVIDIA going forward.
Apart from being a leading automobile maker, Honda is the world’s largest manufacturer of motorcycles. With the latest partnership, Honda will become the 19th worldwide automotive brand to use NVIDIA technology for a new range of vehicles. NVIDIA’s new in-vehicle system solution, hence, will upgrade the premium brand’s product portfolio and also enhance its growth prospects.
Moreover, Honda recorded a 5.9% year-over-year increase in sales on DSR basis and 1.9% increase on volume basis, to 135,255 vehicles in Dec 2013. The uptick was backed by higher sales of Honda and Acura brands. Annual sales surged 7.2% over the 2012 level to 1,525,312 units.
Sales of Honda in the Japanese market went up 10.9% year over year to 52,750 units in Aug 2014. New vehicle registrations surged 57.1% to 29,809 units, while Mini vehicles’ sales dropped 19.7% to 22,941 units.
Global automobile sales are expected to rise to 85 million units in 2014 from 82.84 million in the earlier year, according to IHS Automotive. In 2013, auto sales in the U.S. grew 8% to reach a 6-year high of 15.6 million vehicles. These statistics, point to the market opportunity that NVIDIA needs to capitalize on.
Further, NVIDIA recently unveiled a test drive program for its GRID technology, which supports graphics-heavy applications via cloud computing. This GRID “Test Drive’’ will enable customers to easily test GRID-backed VDI (virtual desktop infrastructure) without a pilot. Notably, the new Test Drive program has attracted significant interest, which will likely generate additional demand for its graphics technology.
We believe that NVIDIA’s innovative product pipeline, comprising recently introduced SHIELD 2 and mobile processor Tegra K1, will boost its top-line growth. Moreover, the company’s recent strategic alliances should be highly profitable over the long term.
Nonetheless, NVIDIA faces competition, mostly from companies like Advanced Micro Devices, Inc. (AMD), Intel Corp. (INTC) and QUALCOMM Inc. (QCOM).The recent spike in the company’s operating expenses remains another factor to consider before investing in the shares.
Currently, NVIDIA has a Zacks Rank #2 (Buy).
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