Economy Driving Car Stereo Prices Higher

By Amy Gilroy -- TWICE, 7/21/2008

NEW YORK — In a rare occurrence for car audio, and consumer electronics for that matter, brands including Infinity, JBL, Audiovox, Rockford, JL Audio and MTX are raising prices, especially on car speakers, due to high spikes in the cost of metals, oil and transportation.

Most suppliers are attempting to pass the costs on directly to consumers while keeping retail margins steady so many are raising the actual minimum advertised price (MAP) on select products.

Subwoofers are hardest hit, as they are laden with metal and heavy, and expensive to ship. Speakers also use oil-based material in their driver cones. Many of the companies raising prices at present are speaker and amplifier brands.

Industry members said they believe the increases will be permanent and that other suppliers will also raise prices when they introduce their 2009 lines.

Infinity and JBL announced increases on select speakers effective August 1.

Rockford increased prices on speaker and amps on a case by case basis effective July 7 by $10 to $25 wholesale or up to $50 MAP. It raised prices on accessories by 2 to 10 percent. "This is the third time in the last nine years that I have seen a mid-year adjustment," Wempe said.

JL Audio increased prices up to five percent or up to $100 on certain speakers effective June 15. VP marketing Manville Smith noted, "Copper is up 45 percent, steel is up 60 percent, aluminum is up 12 percent this year alone and was climbing the year before that, and we all know how much oil has increased. And the price of oil directly affects the transportation."

MTX raised its Bassslammer and Coustic prices on July 1, while holding dealer margins steady, it said.

Several industry members said Audiovox raised prices 9 percent on amplifiers and 10 percent on subwoofers, but Audiovox would not comment on the topic.

Some retailers said they are considering ways to lessen the price hikes, but most said they will likely pass them on to consumers.

Crutchfield senior director mobile merchandise Carl Mathews said, "We're doing what we can to mitigate the impact of the increases. Consumers are used to their CE products going down in price over time, not up. The few times we've passed along price increases in the past, it has lead to dramatic, temporary sales declines. In some cases the sales recovery hasn't taken place until the succeeding models came to market. With the price increases being so broad, there is a chance that this time will be different. We'll see."

Mike Coffield, president of Custom Sounds, Austin, Texas, said the chain stocked up on product at the old prices and so it is staving off raising prices for another 30 days, after the summer season.

Smaller retailers may find the transition more difficult. Russell Harley, owner of Hitts Autosound, Port Royal, S.C., said it's "hard to say" if the price increases will hurt sales. Given the well-known rise in cost of material goods, Harley believes "people will be understanding. But he admitted, "I will probably find myself gravitating towards brands that didn't have a price hike."

Even suppliers who have not raised prices admitted to feeling a pinch in profits. "We are all feeling the effects of the current economic conditions with fuel prices on the rise," said Pioneer VP marketing and product planning Larry Rougas. He added, "Pioneer-Mobile is currently fighting to keep from increasing prices at this time."

Eclipse and Kenwood also said they are not raising prices at this time. However, some suppliers privately told TWICE that they may raise prices with their 2009 line introductions.