Car Stereo Hit Hard In Fourth Quarter: CEA, NPD

By Amy Gilroy On Feb 11 2008 - 8:00am

Car stereo sales saw steep declines in the fourth quarter in both wholesale shipments and sales to consumers, according to the Consumer Electronics Association (CEA) and The NPD Group.

CEA said shipments fell in both dollars and units across all traditional categories. In dollars, wholesale shipments of single CD players fell 4 percent, amplifiers dropped 21 percent, woofers dropped 18 percent and speakers fell 8 percent for the fourth quarter 2007 compared with the same period in 2006.

Dollar sales to consumers, according to NPD, fell 24 percent in single-CD players, 23 percent in speakers and 26 percent in amplifiers.

Kenwood cited several reasons for the industry's soft quarter, including gas prices and inclement weather. Instead of traditional car stereo, many people purchased personal navigation devices (PNDs), added consumer electronics senior VP Keith Lehmann. Sales for PNDs skyrocketed in the fourth quarter due to heavy price discounts and were up by 400 percent for the year, said industry members.

"Gas prices were up by about 80 cents a gallon compared to this time last year," said Lehmann, adding, "Also, this was a remarkable winter. There were torrential rains in the Pacific Northwest and very harsh, cold weather in the Midwest and Texas. The Northeast was not affected as much, but dealers there in Q4 gravitate towards sales of remote starters."

Industry members also noted that Best Buy stopped its free installation promotions late last year.

Circuit City reported in December that comparable-store sales for mobile products, portable digital audio and satellite radio combined declined by double digits, while sales of navigation products increased by strong double digits.

Al and Ed's Autosound, Van Nuys, Calif., claimed the chain "experienced a decline in Q4 business as did most other retailers. The biggest challenge we saw was competing for consumer dollars in a down economy against other categories — specifically, computers, gaming devices, portable music players and other similar products," according to product manager John Haynes.

Dan Jeancola, merchandising senior VP at Car Toys, Seattle, said, "We did not see the negative results reported nationally. October/November performed to high-single-digit year-over-year increases. December gave us a scare early on, but finished strong the last 10 days to make up the gap and finish similar to October/November." It was not clear whether these results included portable GPS.

In a continuing anomaly, car stereo shipment sales for full-year 2007 were up across all categories, according to CEA, but the reverse is true, according to NPD's sell-through data.

The disparity between the quarterly statistics of the two leading industry sources widened noticeably in 2007.

CEA said CD players were up 7 percent in units and 0.2 percent in dollars while NPD said sales to consumers in CD players were down 15 percent in units and 18 percent in dollars.

In amplifiers, CEA said sales were up 0.4 percent in units and down 4 percent in dollars. But NPD said sales to dealers were down 19 percent in units and 17 percent in dollars.

Two of the possible reasons cited for the discrepancies were that NPD does not track Internet sell-through and that some of the shipments to U.S. distributors and retailers tracked by CEA may have been transshipped for sale overseas.

CEA industry analysis senior manager Steve Koenig explained, "We track sell-in data to all U.S. consumer channels. It doesn't matter if it's a distributor, wholesaler, a retailer off line, online — if it's a consumer sales channel that a factory ships to, it's accounted for in our data."

Koenig continued, "There could be some U.S. shipments whose ultimate destination is south or north of the border."

Larry Rougas, Pioneer mobile electronics marketing and product planning VP, said, "We have noted for some months now a dichotomy in the single CD category between CEA and NPD. Although we cannot pinpoint one thing and one thing only, we did notice the imbalance was not associated predominately to 'Web sales,' but rather a nuance change in how some manufacturers reporting now — no longer consider only U.S. distribution."

JBL brand marketing director Chris Dragon blamed Internet sales for some of the disparity. "Amplifier and speaker sales are up and have been trending up for the last three years. It's up at the 12-volt specialist and in alternative channels, which is online sales."