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Buying Groups Get Aggressive In Car CE

Las Vegas — The $4 billion car entertainment business is quickly reorganizing into buying groups to better compete in an increasingly difficult market place.

Brand Source is “soft launching” a new mobile entertainment division at International CES, marking the second car stereo buying group to emerge in the past two years. It announced the first five suppliers to join the division will include JL Audio, Alpine, Eclipse, Mitek and HushMat.

“The manufacturers have finally realized that buying groups are an important factor. For 20 years it’s been a ‘no no’ in car electronics — we were all growing. But now we’ve been in decline and this gives us the opportunity to buck that trend,” said Rick Mathies, executive director of the Mobile Entertainment Retailers Association (MERA), which allied with AVB to create the new mobile division called Mobile Entertainment Source (MES).

MERA, with 350 car stereo specialist members, hopes the new MES group will attract 1,000 to 1,200 members. Jim Ristow, executive VP of Brand Source’ Home Entertainment Source (HES) division said he hopes MES will follow the path of HES, which has grown from a volume of $250 million in 2001 to over $1 billion.

In Car Experts (ICE), the first car stereo buying group, launched in 2006 and recently announced that Kenwood and Rockford Fosgate as the latest suppliers to join.

The group also announced a unique partnership with Enterprise car rental company, so that if a member wants to supply a customer with a rental car while his car is in the installation bay, Enterprise will supply a discounted rate to be announced. Other ICE members include Pioneer, JL Audio and Boston Acoustics.

The group says it differs from MERA’s efforts in that it is selective in its membership and claims it has turned down more members than it has accepted. Retail members include 138 storefronts, and the group plans to grow to approximately 600 storefronts.

Executive director Rob Elliott said ICE will focus this year on the emerging categories of car tracking and OEM integration as these areas suited to specialists.

In yet another effort to organize and improve the car stereo market, Pioneer at CES announced it is inviting industry members to participate in a 12-volt summit to be held this summer with the aim of re-invigorating the car electronics market.

“We would like to open a dialog in the community as to how a greater awareness in the public can be managed,” said Pioneer marketing and product planning VP Larry Rougas said, adding, “Look at what the milk industry did with ‘Got Milk.’”

According to The NPD Group, sales of car stereo single-CD players fell 17.4 percent for the year through September 2007, continuing several years of decline. Car speaker sales fell 10.3 percent for the period and amplifiers fell 14.8 percent.