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Aftermarket Mobile Audio: What's Next

12/20/2010 12:01:00 AM Eastern

NEW YORK – Aftermarket autosound, A/V and navigation
sales were pummeled in 2009 by a perfect storm
caused by a tanking economy, rising OEM competition,
and the continuing shift in expenditures by younger
consumers toward anything related to PCs, iPods and
games.

In 2010, the storm calmed, but the water remained
choppy.

To assess where we’ve come from and where we’re
headed, TWICE asked marketers from several 12-volt
companies to discuss key aftertmarket topics. Here’s
what they said:

TWICE: How did the mobile electronics aftermarket
fare in 2010 at the retail level in dollar volume?

Keith Lehman, Kenwood: Dollar volume was either
flat or down, according to many dealers. Many reported
that while sales volume was challenging, profitability was
on the increase due to lower overhead, greater efficiencies
and better inventory management. This was about
what we expected.

Regarding the outlook for 2011, we expect to see a
slower industry decline. In-dash navigation has been a
major business generator along with entry-level multimedia
and all types of in-dash CD. Speakers and amplifiers
have been extremely tough.

Larry Rougas, Pioneer: The year 2010 fared a lot
better than Pioneer had planned following what the CE
industry experienced in 2009. For Pioneer, our A/V category
experienced the most success in 2010 because
we hit the “sweet spot,” offering the right features at the
right price points. Our in-dash navigation lineup also
experienced similar success, the AVIC-X and Z-series
navigation systems bring the most advanced in-car entertainment
features into the dash, and with expanded connectivity,
such as Pandora via iPhone and Bluetooth connectivity,
it made them a top choice for connected users.

Adam Thomas, Clarion: The speaker category excelled in 2010 and is up double digits in year-to-date
dollar sales. In-dash autosound and amp shipments are
up slightly over the year-to-date through October in units
and stable in dollars.

2011 will continue to see growth in navigation products
through the specialist channel. Whether this is single-
unit navigation or with black boxes will depend on the
specific channel. Bluetooth will continue to be a demand
feature as most consumers are looking to integrate their
phone in this basic manner. CD will continue to be challenging
as the overall industry sees price compression in
all source and video units.

TWICE: Did any distribution channels fare better than
others in 2010?

Lehmann: Mobile electronics specialists and e-commerce
were the best channel performers in 2010.

Rougas: Our independent specialist retailers and regional
accounts did an outstanding job this year coming off such difficult economic conditions in 2009. We were
also very pleased with the performance of our distributor
channel as well.

We expect that 2011 will continue to be a challenging
year. Economic recovery is taking longer than we would
all like. Thus, Pioneer’s focus will be to continue to work
closely with all of our channels of distribution and offer
them the right tools needed for a strong 2011.

Thomas: Clarion’s distribution focus remains primarily
on the 12-volt specialist. We did see more of an increase
to this channel through our distributors.

TWICE: What features or technologies were in highest
demand in 2010, and what do you expect for 2011?

Lehmann: We see continued demand for new technologies
such as Internet radio control, HD Radio and
control of digital content from mass-storage devices
(such as the iPhone, Android phones, portable hard
drives and thumb drives). Bluetooth is still very strong,
and interest is gaining in audio streaming. Satellite radio
continues its decline in the aftermarket due to higher interest
in Internet radio and HD Radio, with the subscription-
based [satellite-radio] model continues to struggle.

Connected navigation technologies have gained
mainstream awareness, and we will see more of this in
2011. Marine product sales have surged a bit in 2010,
and more companies will likely get into the game. Some
have said that driver-assist products such as FLIR and
lane guidance will be more popular, but I think this will be
somewhat limited to the expeditor channel.

Consumers will continue to enjoy very high value from
2011’s selection of mobile electronics, with retailers becoming
more creative in their assortment of products
and services, such as window tinting, vehicle detailing,
breathalyzer ignition lock installation, and so on.

In November at the SEMA show, dealers were more
positive about 2011 than they were before. New- and
used-car sales are expected to grow in 2011, and that
pent-up demand will drive sales of tinting, seats, and
maybe some audio and navigation business.

Rougas: Pioneer has always been among the leaders
in developing audio and interactive technologies in the
car. In 2011, Pioneer will continue to improve integration,
connectivity and ease of use, and will follow consumer
trends in the U.S., such as the increased popularity of
Internet radio, Bluetooth, HD Radio and even socia- media
networking. Pioneer will continue to focus on making
driving and being in the car more enjoyable and convenient
and strive to enhance the consumers’ driving experience,
without compromising design or safety.

Thomas: iPod/iPhone compatibility will pretty much be
mandatory in the future for all but the entry level. HD Radioready
for the majority of models is required by the market,
especially in mid- to high-end models. Bluetooth is gaining
in popularity, especially on high-end products like A/V-navigation
in-dash units, A/V multimedia units and for some CD.

In the next few years, the following will be key: One is
OEM integration solutions for people who increasingly
want to keep their factory radio but increase connectivity
and sound quality. Another is smartphone control,
not only for Internet radio but also enhancing the entire
mobile experience with real-time connectivity and LBS.
Simple app control like Internet radio will be more and
more common on mid- to high-end products. Bluetooth
will be more prevalent and affordable, driven by convenience
and local/state legislation. HD Radio built-in will
become more prevalent and affordable. Digital media receivers
(mech-less) will be more prevalent, however, still
years away from overtaking CD receiver sales.

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