Cautious Optimism On 2nd Half

By Amy Gilroy On Jul 11 2005 - 6:00am




Early 2005 figures from the Consumer Electronics Asociation (CEA) show that autosound is up slightly in units, leading suppliers to be cautiously optimistic about the second half.

A particular bright spot for the market this year is in amplifier and speaker sales, which showed double-digit dollar growth through April, according to CEA. Also encouraging is that satellite radio rose almost 24 percent in dollar sales. CD and cassette head units, by contrast, were down 16 percent in dollars and 12 percent in units.

Total autosound shipments to retailers were up by a half percent year-to-date through April in units, according to CEA. Dollar sales, however, fell 2.9 percent due to price erosion on mobile video and CD players.

Prices on head units are expected to continue to decline with Pioneer leading the fray with a $79 summer promotion (See p. 45).

But after several consecutive down years in autosound, the CEA results for the first four months look promising, said suppliers.

“It's been a wild ride out there, that's for sure,” said Clarion's retail sales VP Dean Hutto.

Kenwood said it is happy with the early results because of the boost in amplifier and speakers. Car electronics VP Keith Lehmann said the trend shows that retailers are countering the slowdown in CD sales by focusing on the aftermarket's advantage in speakers and amplifiers. He also said that satellite radio and iPod integration is bringing new customers into the store. “The customer is predisposed already to an audio purchase when they buy satellite radio or an adapter for an iPod,” so that retailers have the opportunity to sell a system upgrade.

JBL credits the turnaround in speaker and amplifier sales, in part, to the fact that retailers have changed their selling approach to “trunk forward” selling. “There are fewer and fewer applications in the car where you can change a head unit. For years, that was the way to change a system. That isn't flying any more and will fly less and less as time goes on,” said Chris Dragon, brand marketing director for mobile systems. He noted that OEMs have not yet jumped with both feet on the bass bandwagon because they must cater to different customer preferences. “We do 17 of 18 Toyota platforms and we've had consumers call and say there's too much bass in the system. So OEMs have to be careful not to put too much bass in,” Dragon noted.

Dragon stressed that every satellite radio consumer, including a plug-and-play customer, is a candidate for a system upgrade. “If a person buys satellite radio, he's getting greater bandwidth, so why not add some speakers and get better bass?”

Another encouraging sign in the 12-volt market is that suppliers selling iPod-ready CD players say that this niche is booming.

Pioneer said strong sales have caused a back order on its iPod adapter, and Alpine said it was out of stock on some iPod-ready models at press time due to high demand, although additional stock will ship this month. Clarion said it can't keep its VRX755 in-dash DVD/monitor with iPod adapter in stock. In addition, new brands continue to offer iPod ready head units, such as Jensen, which expects to offer two models in January.

“I would say that, overall, the first half has been a positive turn of events. And retailers and manufacturers that have strong partnerships are doing well. Our impression is that, overall, sales are up slightly,” said Alpine's sales VP Steve Witt.

Lehmann foresees some 12-volt categories finishing the year well in the black, including amplifiers, speakers and video units, although video dollars will likely be flat, he said. “Navigation will continue to grow because of increased consumer awareness. There will be some price erosion, but it's still a high-ticket item,” he added.

Alpine is predicting a modest increase overall for the year and for the next few years, said Witt.

Sony's mobile electronics general manager Andrew Sivori noted, “If current trends continue, I think core audio will see slight decreases, but we'll anniversary the amazing seasonal spikes we're seeing in some of the growth categories [such as navigation and satellite radio], so the industry will end up flat to slightly up.”

Some suppliers say 2006 will be a watershed year because they will boost the digital technology in their systems dramatically. Both Dual and Panasonic said they expect to make huge leaps forward in technology for 2006. They and others claim new products will play multiple formats of digital media, and connect with new devices such as personal media players or PMPs — handheld video/MP3 devices — and traditional MP3 devices such as the iPod.

Regarding Christmas, suppliers expect the focus on promotions seen over the past few years to continue.

Audiovox's mobile electronics senior VP Tom Malone said this Christmas could see promotions on in-dash DVD/monitors bringing street prices down to a low of $499. “This Christmas will probably be the first year you see aggressive promotional selling on multimedia [in-dash DVD/monitors], possibly selling for $200 less than they are today. Dual confirmed, “We've got products in the works that will be competitive with that price point [$499],” according to director of product development Robb Groner.” Current in-dash DVD/monitor prices fall in the $649 to $1,199 range, said Malone.

Aftermarket Autosound and Video Factory To Dealer Shipments
(Units in thousands; Dollars in millions)
UnitsDollars
Product20052004Chg.20052004Chg.
Head-Units (CD and Cassette)3,911,6414,467,264-12.4%$416,253,323$496,187,894-16.1%
CD Changers87,020126,136-31.0%$10,241,473$14,855,001-31.1%
Amplifiers855,680758,07012.9%$111,071,852$99,250,57611.9%
Car Speakers3,340,2753,039,5289.9%$166,037,470$143,647,23515.6%
In-Dash Monitors68,54349,06839.7%$51,206,003$48,587,5365.4%
Overhead Video Consoles135,07372,22287.0%$49,912,316$42,507,67717.4%
In-Car DVD Players88,28462,65240.9%$10,488,893$10,045,1834.4%
Satellite Radio Receivers787,111647,37421.6%$68,315,490$55,234,58023.7%
Total9,273,6279,222,3140.6%$883,526,820$910,315,682-2.9%
Source: CEA ©TWICE 2005





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