New Cars May Ship With Fewer Electronics

By Amy Gilroy On Jul 20 2009 - 6:00am




Cars may soon ship with fewer navigation systems, premium radios and other electronics as a result of recession, said industry members, although the forecast is subject to debate.

Mike Marshall, J.D. Power & Associates automotive emerging technologies director, expects that the next round of cars to reach dealer lots (once the current stock is sold) will be lower in “content.” He noted, “I believe that the bigger ticket items will take the hit such as [navigation] and rear-seat entertainment.” But once the economy improves, he expects the zealous packing of cars with electronics to resume, and stated his opinions are not based on J.D. Power research.

Car stereo suppliers said “de-contenting” is already apparent on a small scale.

“We're seeing it in little doses. Nothing that you can identify in any one line or any one accessory,” said Audiovox Electronics president Tom Malone.

Keith Lehmann, Kenwood consumer electronics senior VP, said, “De-contenting is definitely happening, but it's happening in a small measure … car dealers are absolutely scared to death to offer vehicles for even one more dollar than customers are willing to spend.”

Rosen Entertainment and Alpine also reported evidence of de-contenting.

Lehmann claimed, “Nissan and Toyota, for the last eight months, have been pulling out features at the port so they have built up a huge stockpile at the port because they didn't want to burden vehicles. They pulled out premium radios and put in standard radios.”

However U.K.-based research firm Supplier Business said several car makers, including Toyota and BMW, claimed they are not de-contenting electronics.

De-contenting can include removing keyless entry systems, rear-vision cameras or back-up sensors, as well as offering standard vs. premium radios. The trend may also include shipping cars without cruise control and power windows and door locks. The removal of such features can easily chop $1,500 off the base price of a car.

Any effect on the aftermarket is not yet clear because de-contenting is expected to last only as long as the recession, creating a window of opportunity of unknown duration.

Malone said suppliers will likely research the shifts in contenting and then alert expediters and retailers as to where the opportunities lie.

Regarding rear-seat entertainment specifically, Malone noted, “I can't say fewer cars are coming in with mobile video. It's one all the car makers are really looking at because it's expensive to add, but they also know it helps drive car sales. So it's being looked at, but I haven't seen any evidence it's been pulled yet.”

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