These days, a variety of navigation systems have been developed to provide the driver with necessary information such as vehicle location, direction and destination. An electronic compass is being widely used as a component for such navigation systems (1), (2) and (3). Compared with a conventional magnetic compass, an electronic compass has the following advantages: 1.High vibration durability and quick response. 2.Easy to calibrate and reliable. 3.Sensor and display units can be separated. The electronic compass, however, is accompanied by two serious subjects: the development of a sensitive geomagnetic sensor, and calibration of direction error due to an unexpectedly magnetized vehicle body. First, we developed a new geomagnetic sensor utilizing magnetoresistive elements (MRE) and magnetic lenses. Next, we clarified the magnetic disturbances and defined the mechanism of vehicle magnetization, thereby establishing a simple calibration technique for such magnetization. As a result, the newly developed electronic compass has been in mass-production since May 1991.