OE-Look Factory-Fit Radios: A Fit For Retail?

By Joseph Palenchar On Mar 21 2011 - 4:01am




NEW YORK — OE-look factory-fit radios fit nonstandard dash openings in specific vehicle models and look like they came from the factory. The radios plug into factory wiring harnesses without additional harness adapters, and many plug into OEM databus systems to ensure that other factory electronics, such as OnStar, continue to work as designed.

But are factory-fit radios a good fit for the retail channel?

In recent years, suppliers reintroduced OE-look radios to the expediter channel, and now some retailers want to sell the products through their retail storefronts. The dealers believe they can expand their potential customer base by appealing to a greater number of used-car and new-car buyers.

Among used-car buyers, retailers could tap demand for factory-look radios that deliver features — such as touchscreens, Bluetooth and iPod control — that used to be rare in factory radios. In the new-car market, retailers believe they can reach cost-conscious new-car buyers who don’t want to spend thousands of dollars for an option package just to get the premium sound system or navigation that they like.

In both segments, dealers could upgrade customers from a CD system to a multimedia-navigation system.

The opportunity for OE look radios at retail has grown in both the new-car and used-car segments because of consumer’s newfound frugality, marketers and retailers said. Used-car sales have soared during recent tough economic times because more consumers have opted to save money by buying previously leased vehicles. Although newcar sales have surged as well in the past year, new-car buyers don’t always want to pay for an expensive options package just to get the one or two options that they really want, they added.

In both segments, OE-look radios would also appeal to consumers displeased with the cosmetic look of a standard single-DIN or double- DIN radio fitted into an unusually shaped factory opening with the help of an install kit. OE-look radios would also appeal to consumers who want to replace a factory radio that’s integrated with a vehicle’s databus but don’t want to lose the functionality of such factory systems as On- Star, door chimes that sound through the factory speakers, and the like.

Databus integration is also needed in select vehicles to ensure the outboard factory amplifier turns on when the radio is turned on, and in some vehicles, to ensure the check-engine light doesn’t remain lit when the OE radio is no longer in the dash.

OE-look radios resolve such installation issues because they fit directly into unusually shaped openings, adopt factory colors and styling cues, and, depending on the vehicle, incorporate databus adapters. Some also feature steering-wheel control interfaces, making it unnecessary to install a separate adapter.

Key issues for retailers, however, include the choice of displaying and inventorying head units that fit a handful of vehicles rather than hundreds of vehicles, whether the radios can be merchandised effectively by displaying and inventorying only a model or two, and whether dealers need only display one SKU and use literature and other marketing materials to sell the others.

Inventory will be a challenge for retailers, said Audiovox Electronics president Tom Malone, whose company is expanding its selection of factory-look radios this year for the expediter channel.

“Expediters can target specific car models” because they supply car dealers that sell only specific vehicle brands, he explained. “How many GM radios does [a retailer] stock?” Selling OE-look radios to retailers “requires unique programs,” he concluded

Although independent dealers and retail chains have asked Audiovox for OE-look products, Malone is cautious. “We need to look very closely to see if that business is manageable,” he said.

Nonetheless, “retailers see this as a brand new category,” Malone continued. “Retailers have shown a surprising level of interest in our OE-look radios that we’ve not seen before.” The retailers are open to nontraditional products, seeing them as “an opportunity to upgrade consumers to a factory-fit radio with the bells and whistles of aftermarket radios,” he explained.

At last year’s SEMA show, Rosen Entertainment Systems also noticed retailer interest, although before that, Rosen began selling OE-look radios through Crutchfield’s on-line store shortly after entering the OE-look market two and a half years ago, said sales and marketing VP Steve Weimar. Some expediters who operate retail stores also merchandise Rosen’s OE-look multimedia-navigation radios on their salesfloors, he added.

Rosen’s focus remains primarily on the expediter channel, but Weimar agrees some opportunity exists for retailers because an OE-look radio would appeal to “consumers looking for a more finished look.”

Dealers would be hard-pressed, he agreed, to inventory and display multiple models of vehicle-specific radios that fit only a very narrow range of vehicles.

Weimar, however, sees some potential solutions. For one thing, a dealer who knows his customers might need only put a couple of vehicle-specific head units on a demo board and show pictures and provide literature for radios that fit other vehicles. Because all of Rosen’s OE-look radios are multimedia-navigation units that provide the same functionality and user interface from one SKU to the other, dealers could demo a Honda Civic radio to a Mazda owner, he contended.

Inventory might not pose much of a challenge either, Weimar continued, because retailers could do what Rosen’s expediter customers do: buy on an as-need basis. Rosen, he noted, offers just-in-time order fulfillment with same-day shipping. Retailers could also turn to dealers who supply expediters for their factory-fit radios, he noted.

Chris Cook, executive director of the Mobile Electronics Retailers Association (MERA), agreed that OE-look radios present an opportunity for aftermarket retailers.

Expediters who have retail stores, Cook noted, often put only one OE-look radio in their demo board, and that radio might fit in multiple vehicles from one automaker, Cook explained. For other vehicles, the dealers whip out a fit guide.

The biggest potential is in the used-car market, Cook said. Forty to 44 million used cars are sold per year, or four times that of new-car sales, he noted. Nonetheless, new-car owners are also a target. “You can get a reasonably priced upgrade to a navigation system at a fourth of the cost of paying $2,500 to $4,000 for an options package that includes navigation,” he explained.

Like Cook, Robert Elliott, executive director of the In Car Experts (ICE) buying group, also sees potential, at least in cases in which a dealer can’t get an aftermarket radio to fit properly. “It’s something they could embrace when there is no other choice,” he said.

For independent specialty retailers, however, there is a downside to widespread adoption of OE-look radios in the retail aftermarket. “If it’s a direct swap and plug-in, why seek out an expert installer?” he asked. Such installs “have no real technical requirements.”

In addition, he said, OE-look suppliers “are not necessarily companies know for class-leading in-dash navigation radios,” so performance-oriented specialists might be less inclined to offer them.

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