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Aftermarket Car Audio On The Road Again

2/21/2011 12:01:00 AM Eastern

NEW YORK — Aftermarket car audio sales rose in
2010 for the first time in years and will probably do
so again this year, retailers and suppliers told TWICE.

The turnaround is thanks to a better economy, rising
used-car sales, more affordable prices on key technologies
such as Internet radio, and young consumers
enamored with the touchscreen interfaces of double-
DIN car-A/V units, retailers and suppliers said.

The upturn could possibly accelerate now that, according
to one supplier, some regional retailers plan
to start advertising car audio again or boost what little
advertising they did after cutting back in recent years.

“The exposure for car has probably never been
less,” said Audiovox Electronics president Tom Malone
about car audio advertising by retailers. More retail advertising
will boost consumer awareness of all the new
technologies that have hit the market in recent years
and encourage them to upgrade older factory systems
with iPod/iPhone control, Internet radio, Facebook integration
and the like, he said.

Likewise, some dealers are considering modest expansions
of board space for car audio, Malone said.

In 2010, aftermarket car audio sales rose at the factory
level by an estimated 11.2 percent to $1.37 billion
following three consecutive years of double-digit declines,
the Consumer Electronics Association (CEA)
said. The consecutive annual declines dragged down
2010 sales volume to less than half of 2006 levels,
when sales rose 16.9 percent to $2.65 billion, CEA
statistics show.

Mobile video sales, which include in-dash navigation,
fell 5.7 percent to $345 million in 2010, CEA estimates.

Although CEA forecasts flat autosound sales in 2011,
some retailers and suppliers are more optimistic.

Retailers of all genres “had a pretty strong year,” said
Alpine VP/GM Steve Crawford. “Seven percent growth [in
2010] is probably not far off the mark, and we’re not getting
the slowdown message in 2011 from dealers.” Based
on “deep discussions with all retail channels,” he said,
“there’s no indication that growth will slow down in 2011.”

Likewise, Audiovox’s Malone said regional retailers enjoyed
“a little uptick in business” in 2010 and believe they
will beat 2010’s numbers in 2011.

One of the drivers behind 2010 growth was rising newcar
sales, but a very healthy used-car market also buoyed
sales, Crawford said. Used-car purchasers look to replace
a broken factory system or upgrade an older working
system to add such new technologies as iPod control,
Internet radio, or HD Radio.

Crawford agreed with ICE executive director Rob Elliott
that double-DIN in-dash A/V systems without navigation
enticed consumers into the aftermarket, particularly
younger consumers who want to replicate their experience
with iPod and smartphone touchscreens.

In-dash video without navigation “surprised a lot of
people,” said Elliott. “A lot of people like the 6- and 7-inch
touchscreens for the ease of use.” The screens, which also
have a “cool” factor, let people swipe through album art
and access content more quickly and easily, he explained. For some people, viewing iPod-stored video on the
screens is a primary purchase motivator, he added.
Some people also connect the head units to rear-seat
video screens to play DVDs or iPod video, he noted.

Older consumers are also attracted to the touchscreens
and can be more easily stepped into a navigation
add-on at the time of sale, he added.

Alpine also found “a big increase in demand” for car-
A/V units, especially among youth who will pay $300
to $500 for a head unit rather than spend $900 on an
all-in-one A/V-nav unit, said Crawford. Younger consumers
are also more comfortable using smartphones for
navigation and don’t want an in-dash navigation unit or
even a portable navigation device (PND), Crawford said.

All-in-one A/V-nav units enjoyed an uptick in 2010,
Crawford added. These products skew toward older
customers who probably had an OEM system and
prefer the ease-of-use that they provide compared to
PNDs.

Also boosting aftermarket sales is the e-commerce
channel, whose “sales got on the map in 2010,” Crawford
said, noting that Alpine doesn’t sell that channel.

ICE also contributed to its members’ 2010 growth
with support services and marketing programs, Elliott
said. More than half of ICE members reported that
2010 sales were up on average 25 percent in 2010,
and “those members who make the most use of ICE
tools are the ones reporting the highest increase in
business.” The tools include a website designed to
send prequalified customers to members’ stores, a
hosted and weekly updated website for members, and
a high-definition commercial that individual members
wouldn’t have the resources to create for themselves,
Elliott said. Last year, ICE also launched a consumer
publication distributed by ICE to the waiting rooms of
local businesses near members’ locations.

ICE, which has more than 185 member storefronts
in more than 40 states, provides group marketing services
and enhanced vendor programs.

Members’ momentum will continue in 2011 with the
dramatic expansion of Internet radio into a wider range
of head units at more affordable prices, Elliott said.

OEM integration “has gotten stronger,” Elliott also
said. “Retailers really embraced it,” and the No. 1 integration
feature is adding iPod control to a factory radio
that lacks it. Once those consumers are in the door,
dealers get the opportunity to add HD Radio, satellite
radio or hands-free Bluetooth, he said.

Also driving up sales are lower prices that helped
expand the customer base, Elliott said. The trend
was driven in part by suppliers bringing out products
at lower price points. Although prices are “still a little
lower than we’d like them to be,” he noted, “our guys
are good at adding onto a sale.”

For his part, Mobile Electronics Specialists of America (MESA) president Mike Cofield said his
group’s independent-specialist members were
up 2 percent to 20 percent, all categories combined,
in 2010. Although the year is young, “no
one is crying the blues,” he said. “I had a good
January, but February was weak because of the
Texas snow,” he said of his 16-store Custom
Sounds chain with 11 stores in Texas.

Though multiple categories enjoyed growth,
one that either didn’t grow or didn’t meet expectations
was the mech-less head unit, said
Audiovox’s Malone. “It seemed to make sense.
Why does an 18-year-old kid need CD?” Malone
asked. But kids or their parents still want the
slot, and in many cases, mech-less models cost
the same or more as CD head units because
of the addition of touchscreens or flashier cosmetics,
he noted.