Microsoft Corp. and Kenwood Corp. have signed a cross-licensing agreement to develop technology for car-navigation systems and consumer electronics.

Both companies will share software and technology to be used in the products, Microsoft said in a statement distributed by PRNewswire on Monday.

Tokyo-based Kenwood will make a cash payment to Microsoft for use of its patents, the statement said, without providing figures.

The agreement follows a plan by Sharp Corp. and Pioneer Corp. to jointly develop car-navigation equipment and DVD players. Kenwood will create a venture next month with Victor Co. of Japan Ltd., a unit of Matsushita Electric Industrial Co., to develop car electronics and home-audio systems to cut expenses and bolster profitability.

Kenwood's car electronics division, the company's biggest by revenue, posted an operating loss of ¥2 billion last fiscal year.