Autosound Generated Nice, Hot Summer Sales
By Amy Gilroy -- TWICE, 9/20/1999
Autosound sales during the key summer selling season were up slightly over last summer, driven by lower prices on CD players, continued solid sales in subwoofers and amplifiers, and the emergence of car video.
Suppliers -- including JVC, Kenwood, Panasonic and Pioneer -- reported strong gains for the season over last year, with Pioneer claiming it is in back-order on some of its CD players.
Kenwood VP of mobile electronics Bob Law said his company had double-digit gains for July and August.
"Because the economy is strong, a lot of the core car audio customers are working and have disposable income," Law said. "Also CD player pricing is coming down, and that is clearly what is driving sales. Plus there has been a lot more promotion of car audio by the big-box retailers, which raises awareness."
"Car audio continues to be a profitable category," he continued, "and it helps the big retailers get the young customers into the store at a time in their life when they are starting to establish buying patterns."
Among the national chains, Best Buy said it is promoting certain brands more heavily, while Circuit City was aggressive this year in participating in soundoff contests, including sponsoring 82 dB drag racing events.
Best Buy's senior buyer Phil Kalleberg said, "If you look at our print space allocation year after year, it has only changed slightly. But we have added two major brands, Clarion and Rockford Fosgate, and we have diligently promoted those brands. I think we have created demand for the brands and the category."
Kalleberg added, "We are promoting the amps very heavily, and we did a huge prom night broadcast spot this spring. It was a Best Buy Idea Box with the theme, 'Put a party in your car with Rockford Fosgate.' It was a tremendous success. I think it raised awareness of car stereos for the industry."
According to CEMA, car audio sales for the first half of the year were up in dollars by 12.6% to $1.1 billion (see TWICE, September 6, p. 4), marking the first time the market hit $1 billion in sales during the first half of the year.
Based on past market performance, CEMA said, the industry is on track to hit sales of $2.1 billion, exceeding the association's 1999 forecast of $1.9 billion.
JVC sales and marketing VP Tom Coronia said his company's sales for the summer were up in double digits over last year. And from "calendar-year January to the current month, every single month has been up for us."
Pioneer's single-CD sales are up about 80% over last year, with its entire single-CD line on back-order, according to car electronics VP Russ Johnston, who attributed a general increase in autosound sales to lower prices.
"The category as a whole has dipped below $200 for a fully featured product in volume price points," said Johnston. "December was never a big selling month in past years, but now that the product is below $200, Christmas is the single-largest retail month. So that's been a big change over the past two years."
One feature that has been very successful for Pioneer, even at $650 to $750 retail prices, is organic EL.
"Pioneer's single-CD business is astounding," stated Best Buy's Kalleberg. "They really came to market with one of the best products in many years and have taken considerable share in CD. It is one of the hottest decks we have, and we've had great results with the organic EL. When you walk into our stores and go to the deck board, it automatically stands out."
Retailers reported a mixed bag in sales for the summer, but most pointed to gains over last year.
Steve Wood, merchandise manager for Ultimate Electronics in Thornton, Colo., said, "Our business is very strong year over year. We are very pleased. The amplifier business is exceptionally strong, single-play CD is strong, and the more profitable, higher-priced speakers are doing very well."
"The sales trend has been negative for a couple of years for the industry, but this year is turning out to be stronger than [CEMA] predicted, and we see it continuing," he said.
Steve Sugarman, president of The Sound Company of Orange, Conn., said its double-digit gains are due to car video and CD players. "One $3,000 ticket makes up for a lot of $150 installs," he pointed out, "and video is very profitable in general. The other thing that's really kept us going is midline AM/FM CDs for $200, installed for $250."
"We're looking for dollars to be up for the rest of the year," Sugarman said. "As we get into the holiday, people will want to treat their wives to video in the Suburban for the kids, so we still see a steaming bright future for video."
Charlie Weisel, owner of The Specialists in Tucson, Ariz., said sales are "up slightly over last summer."
"Multimedia added some top-end dollars with summer-vacation TV for cars," he said. "That's where our growth is. I expect this year to be up slightly in total above last year by about 5% to 8%."
Tweeter etc. mobile electronics buyer Marc Spatz said, "Sales in June were down slightly, and July was pretty bad. August was like June, so we'll be down slightly."
"Hopefully, in the fall we'll be up slightly with all these new products, and Alpine just starting to ship their video products in the past month," he added. "But those things won't spike your numbers. It won't make up for sliding prices in CD."
Kirk Mouradian, owner of Divine Sounds in Tampa, Fla., said sales from April through mid-August were flat. "Car audio itself is slightly down, but car video is up, so it's keeping the market slightly ahead."
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