2nd-, 3rd-Tier Brands Combat Soft Market

Although traditionally second- and third-tier brands have fared well during periods of soft sales in autosound, some say the current trend is different.

Ranging from the low to very high end, some non-major brands said they were able to grow their lines recently, but the majority claimed sales are flat.

Focal and Memphis reported double-digit growth over the past two years, but others such as Cadence, Kove Audio and Morel said sales are even with last year. Autotek said its sales are up slightly.

Most of these brands employ a similar formula — limited distribution and high margins — one which can be attractive to dealers when times get tough, and high margins are a plus.

But as Kove Audio's president Gary Kovner explained, the market response is different now, as the times are unique. “In the past, business has been better in a down market. But the industry in general is morphing and changing. There's a lot of things tearing at it from different directions.”

Kovner sites competition from the Internet and eBay, and from OEM radios. He also noted, “There's a lot more segmentation — a lot more performance dealers are doing audio, and a lot more car audio dealers are doing performance. The dealers are not as focused on just audio as they used to be.”

The market figures from CEA support Kovner's theory. Year-to-date dollar sales of head units through September are up only 0.8 percent, but amplifiers are down 15 percent and car speakers are off by 4 percent. Sales of mobile video, however, are up by almost 40 percent for overhead monitors, CEA said.

Car Toys, Seattle; Ultimate Electronics, Thornton, Colo.; and Cartunes, Stillwater, Okla., said they have not added any tertiary, limited distribution brands this year. Austin, Texas-based Custom Sounds has added the Audisson brand, but dropped MB Quart and Clarion. Noted president Michael Cofield, “If anything, we are shedding lines to get a clean, lean mix, so it's easier to manage inventory.”

Still some brands have found a way to boost sales despite the down market.

Focal stated frankly that it has benefited from some of the missteps of MB Quart, whose German operations are in receivership. The company also boosted sales by ratcheting up sales training, hiring nine new trainers for North America. “We don't just teach how to sell our product, but how to sell product in general. We promote top-down selling,” explained Jesse McKindley, national sales manager.

Focal sells speakers ranging from $299 for a 6.5-inch coaxial speaker, to $1,599 for a 6.5-inch three-way.

Memphis claims it has seen seven consecutive years of double-digit growth by sticking with 12-volt specialists and avoiding the big-box retailers. In addition, said product manager Jeff Triplett, “We're fairly certain we have the largest sales force in the industry. We have an inside sales force, one of the only ones, and it allows us to offer a level of service that no one else is capable of doing.”

Autotek said it recently dropped a number of distributors and now mainly sells direct to dealers.

The high-end speaker company Morel said it has been focusing on research and development and will debut a new speaker line in January featuring die-cast aluminum drivers. The products include a new 8-inch three-way midbass model, SR 8.3C, at $945 per pair. Morel claims sales in less than a million a year in autosound

Kove Audio said it sells over $5 million annually in speakers and amplifiers through about 250 storefronts. The company recently released a new Class D 2,400 watt amplifier at a list price of $799, plus a new Armageddon U3 woofer, rated at 5,000 watts capacity, for $1,299.

Massive Audio, at four years old, is a relative newcomer. The brand is mainly aimed at 12-volt specialists, but it has “a handful of distributors for the tertiary markets” said sales manager Bob Goodman. It currently sells through about 100 dealers and is looking to beef up distribution in the major markets.

Massive Audio said its mid- to high-end line is doing better despite the decline in autosound. “Let's face it, there aren't many brands that are pristine anymore as far as distribution,” Goodman said. “Some have stuck to their guns, but most haven't. Dealers are looking for under-distributed brands with good profit potential. Every month we're gaining more. he conversations I have with dealers are they are dissatisfied with one brand or another they've had over the years.