Car audio/video aftermarket sales, excluding portable GPS, declined 22 percent in units and 24 percent in dollars during 2008, as the industry reels from both OEM competition and recession.
The results from The NPD Group follow years of continued declines in traditional car A/V, including a 19 percent drop in 2007 and a 13 percent to 14 percent drop in 2006, both in unit and dollar sales to consumers, according to NPD.
In response, the market is downsizing, with Blaupunkt, Panasonic and Audiobahn exiting the aftermarket and retailers closing their doors.
The good news is there may be more business for those stores remaining. A study of the Phoenix region by market consultant Paul Gosswiller found that 40 car-stereo-related retail storefronts have closed since January of 2007, including 13 Circuit City outlets, leaving 17 specialist outlets remaining, plus Best Buy stores.
Approximately five or six independent storefronts have each closed in Austin, Texas, and St. Louis over the past two years, estimated Mike Cofield of Custom Sounds in Austin. The Mobile Enhancement Retail Association (MERA) has seen more than a 50 percent decline in membership, from 600 retailers in 2001 to less than 300 members, now, according to president Barry Vogel.
There are, however, a few bright spots in the market. The departure of Circuit City has created an opportunity for some specialists. In addition, recent research is pointing to a potential area of industry growth in connecting iPods and other gadgets to the car, according to the 12 Volt Initiative, which is seeking to confirm this trend and then create a promotional campaign.
Also, a few new cars are offering basic models that exclude radios but are prewired so that consumers may add one later (see story at left).
Plus, the driver-assist market is showing signs of taking off (see adjacent Mobileye story).
MyerEmco, which had reduced advertising in car stereo last year, said it is now pursuing autosound more aggressively. Dave Glassman, purchasing VP, said, “I think we have an opportunity because Circuit City left and Tweeter closed in our immediate market. We're going to carry a couple more SKUs than we were, and we'll advertise it. We didn't advertise mobile a whole lot last year.” He added, “We're seeing more people come in asking about car audio because there are fewer places to get it.”
InstallerNet, which coordinates a network of 3,000 installation outlets, said it is benefiting from the demise of Circuit City's Firedog service operation. InstallerNet has received a half-dozen inquiries from suppliers looking to service or install their goods, said William Sheehan, business development director.
JVC mobile VP Bill Turner said the strategy this year for suppliers is to gain share. “The car stereo business is going to continue in 2009 so products must be sold — it's a market share game. Everyone knows it and everything we're doing now is to bolster our market share.”
Some suppliers claimed they are bucking the trend, including Kenwood, which said its dollar sales were up last year by a few percentage points due in-dash navigation.