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Magnetic sensing is used for control and guidance in intelligent transportation systems (ITS). This includes vehicle applications such as lane-keeping in intelligent cruise control as well as driver assistance in highway maintenance functions such as snow removal. This paper presents a new mechatronic magnetic sensing system for ITS. The new system has several advantages both in terms of its hardware design and its underlying reference detection algorithms, providing a significant improvement in performance, maintainability, and upgradability over existing systems. It is a mechatronic system in that it combines mechanical position sensing with electronics implementation of the hardware and the underlying algorithms.