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The car stereo selling season has gotten off to a rocky start, hit by high gas prices and numerous product shortages, said retailers.
Dealers complained of limited supplies on certain products from Alpine, JBL, JVC and Pioneer, noting that the dual dilemma of short supply and high gas prices has caused monthly sales to drop up to 10 percent below last year at some retailers during the peak season.
Retailers who carry many of the above brands have been hit hard. “I think the back-order status from these manufacturers is killing us. This has been the worst year ever. You have the gas and then the back-order. You can't go up in sales. You can't even fill your orders,” said Les Ore, owner of Discount Autosound Audio Group, Virginia Beach, Va.
JVC said it is on allocation on six items because of better-than-expected demand and expects to resolve the back order in 60 to 90 days.
Alpine said part of the problem is that the industry has had three years of declines, so some of the factories were cautious in their production planning this year.
Alpine forecast less than 10 percent growth for this year, but certain products, such as double-DIN A/V units and step-up head units, are growing much faster. Alpine said it is currently air shipping some products to meet the demand.
Some of the key back-ordered products from both companies include the JVC KDA-AVX2 and KDW-AV706 and the Alpine CDA-9856, CDA-9857 and IVAW200AVN, the companies said.
JBL shortages are due to compliance with European ordinances said Jim Warren, sales and marketing senior VP for Harman Consumer Group's mobile division. He noted, “Our JBL brand did experience some short-term amplifier shortages. However, we are now almost all the way caught up.”
Kenwood said it is currently caught up with demand but was back-ordered in May on its new iPod adapter and in-car navigation device.
Pioneer did not respond to TWICE inquiries.
On top of the shortages, retailers are also coping with less store traffic due to higher gas prices, they said. All but two retailers contacted by TWICE said they believed high prices were hurting sales. Those claiming slower sales and/or store traffic due to gas prices include Audio Express, Scottsdale, Ariz.; Sound FX, West Warwick, R.I.; Dashboard, Durham, N.C.; Sante Fe Autosound, Overland Park, Kan.; Discount Auto Sound Audio Group, Virginia Beach, Va.; Jo-Di's Sound Centers, Hartford, Conn.; and The Specialists, Tucson, Ariz.
“The gas hit us right at the beginning of the season,” said Sound FX owner Steve Madeiros. When kids tighten their belts to compensate for expensive gas, they are more likely to stop buying products for the car than other entertainment items, he explained. “You don't connect gas prices to a new video game, but when it comes to putting new speakers in the car, it might dissuade you. We're still doing business and plugging away, but it's absolutely having an effect,” said Madeiros.
Audio Express said foot traffic is down due to high gas prices. Kids are wondering if they will be able to afford their car or truck, so they are not rushing to upgrade the sound equipment, said purchasing manager Paul Gosswiller. “Sales have been slow since gas prices went up. We hear the economic reports that the economy is growing, [but] not in our estimation. It's a foot-traffic issue,” he said.
Madeiros said the impact of gas prices is worse this year than last year because now it's cutting into the key selling season, and consumers now believe the high prices will continue. Last year, he said, “It didn't seem like a long-term thing.”
The reports are the same from many dealers around the country.
Daryl Jenkins, a principal of Dashboard, said he believes gas prices are responsible for a 5 percent decline in April sales and a 10 percent decline in May sales, again, cutting into the car stereo selling season. “I think we had a better February than May. I'm not happy. We're trying to do some advertising.” He noted that sales are also down at the restaurants near his shop.
Steve LaPlante, GM of Jo-Di's Sound Centers, said gas prices are also causing his costs to go up by 10 percent to 15 percent in the case of accessories. “Terminal connectors, tape, wire — we use this stuff every day. Now it's even more expensive.”
Discount Autosound said the store was down 6 percent in May and 9 percent in April. This follows a 10 percent increase in the first quarter. “Yes, I think gas prices are hurting us, but if the factories were shipping as they should be, we would be even or a little up,” Ore said.
For Mark Miller, president of Westminster Speed & Sound in Westminster Md., opening up a box with a near-full shipment from a vendor was like Christmas. “I can tell you I became a JL Audio dealer recently and they shipped my whole order minus two SKUs, and those two showed up three days later. So I had 50 SKUs come in. They should be complimented on that,” he told TWICE.
Car Toys, however, said its sales are up. When asked if gas prices have cut into sales, merchandising senior VP Dan Jeancola said, “Absolutely not. Our car audio business is comp'ing positively this whole year. Store traffic is either flat or slightly up, and we do door counts.”
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.