12-Volt Specialists Down; Improved OEM Cited As No. 1 Cause

By Amy Gilroy On Jul 2 2007 - 6:00am

Many car stereo specialists report sales declines of 15 percent or more this year, despite recent figures from the Consumer Electronics Association (CEA) showing gains in first quarter shipments (see TWICE, May 21, p. 125.).

In past years, retailers cited many reasons for lower sales, including competition from Internet resellers or big-box retailers. But a recent TWICE poll found that most dealers now identify the one key cause for sluggish sales as improved OEM factory systems.

"The business is changing dramatically and fast," said Isaac Goren, owner of Sounds Good, Woodland Hills, Calif. He added, "We're finding the people who want to do something basic, like fixing a radio, are not willing to spend any money … Then we're getting the individuals who want to upgrade their audio system on new cars, but we're getting fewer of them." Sales this year are down by 35 percent year to date, he said.

Jo-Di's Sound Centers, Hartford, Conn., said year-to-date sales were down by approximately 10 percent; Autosound of Lexington, Lexington, Ky., said they were down 20 percent; Discount Autosound, Richmond, Va., said they were down 15 percent; and Great Northern, Burlington, Vt., said sales in car electronics are down 15 percent.

Harvey Wright, CEO of Autosound of Lexington, said, "This is the worst it's been in years. Last year we were flat. I think OEM is still the big factor. It's more and more difficult to find items that are sought by the consumer. They don't know about the technologies they can still add or it's already in the car and it's new and they are unlikely to take it out."

He added, "The guy with a GM vehicle doesn't know he can put Sirius on it instead of XM. That's not public knowledge. He may have Sirius on another car and doesn't want to do two separate accounts. He doesn't know that because he has navigation he can use that as a screen for a backup camera. He doesn't know you can add a booster to your phone."

An exception is "streaming Bluetooth," he said, as kids are beginning to ask for stereo Bluetooth head units that can wirelessly play back music from their cellphones.

Stores bucking the trend include St. Louis-based Hi-Fi Fo-Fum, and Auto Audio, Little Rock, Ark., who reported sales increases of 2 percent and 26 percent, respectively.

Auto Audio said it invests in being the expert in its area and doesn't apologize for its prices.

Installation labor is charged at $90 per hour and clients are offered same-day installation at the time of purchase. President Ross Glover said his salesmen are well compensated and he has at least one computer expert on staff.

"You better have a person who knows computers. He knows car audio like crazy, but he's the kind of guy when your computer crashes, he can do anything. They're expensive." His computer expert previously worked at IBM and is able, among other tasks, to identify the "generation" or style of a customer's iPod to determine compatibility and to help solve other iPod problems.

Second, Glover steps consumers off of FM modulator iPod adapters.

"If you've got 5 gigs on your iPod, how many times do you want to turn that wheel [to find a song] … We have iPod radios that are just as fast as the iPod," he tells customers, adding, "Do you want your son playing with the iPod while he's driving down the road?"

But he said the key is sales people who know what they are talking about. "If you're skipping and stuttering, you're not going to be able to sell them."

Finally, Glover noted, "I've been in business for 30 years. I concentrate on myself and not everything else. I specialize in what I know. Everyone's worried about prices. That's like you're a steak place and your competing with McDonalds. Last month I had a 42 percent increase [in sales over the same month last year]."