CEA: Car Stereo Sales Surge 13% In First Quarter

ARLINGTON, VA. — In a surprising turn, car audio shipments to retailers rose significantly for the first quarter compared with the same period last year.

The Consumer Electronics Association (CEA) reported sales of in-dash CD players to retailers jumped 13 percent in dollars. This followed last year's steep decline of 24 percent.

Sales of amplifiers and speakers also showed bold gains of 22 percent and 31 percent, respectively, through March, despite relatively flat sales for these categories in 2006.

In its forecasts for the full year 2007, CEA had predicted further declines in CD players of 13 percent, and declines in amplifiers and speakers of 7 percent and 8 percent, respectively.

Steve Koenig, CEA industry analysis senior manager, attributes some of the increases for the first quarter to product shortages in certain brands late last year. But he also cited the popularity of Bluetooth and new CD-less products, such as the Alpine IDAX001 and the Clarion FB275BT (expected to ship in July).

"Some brands were back-ordered in Q4 and they fulfilled some of those orders in Q1 that really should have taken place in Q4 … It is an artificial gain to a degree. The same is true for car amplifiers and speakers." He added, however, that "manufacturers are also starting to ship products that are resonating with the aftermarket. Some of the new technologies helping to spur demand are the head units that are Bluetooth ready or have built-in Bluetooth … and Alpine and Clarion are [offering] units without any physical media drive or player."

Alpine began shipping the IDAX001 in late March and "sold to our production plan, which was aggressive and reorders have been steady," said marketing VP Steve Witt, but he added, "The great news is we are attracting the older demographic back to car audio," claiming that a surprising number of purchasers are of retirement age rather than the expected 22- to 36-year-old male.

Several suppliers said they were surprised by the strong CEA results and could not venture a reason for the gains.

When asked if the industry might sustain these increases through the year, Directed president/CEO Jim Minarik noted, "I would like to believe so, but these increases are not consistent with what we are hearing from retailers who say that business is, at best, difficult."

Another supplier noted that CD players with built-in 3-inch LCDs are becoming more popular and helping to boost average selling prices on in-dash CD. The LCD-equipped units carry prices from $199 to $699 and are classified as CD players by CEA, rather than in-dash video devices.

Panasonic attributed the increases to suppliers packing more features at lower price points, which are in higher demand.

For the first quarter, CEA reported that sales of satellite radio (excluding wearable portables such as the Pioneer Inno) were down 59 percent in dollars. Minarik said he expects the decline in satellite radio for the year to shrink. Directed, the exclusive distributor of CE products for Sirius, said its sales for Q1 also fell 50 percent, but the company is predicting better sales later this year and a narrower decline of 22 percent for the year.

Both Pioneer and Sony said they were not available for comment.