NEW YORK — A turnaround in the installed car A/V and navigation systems has begun.
The double-digit downturn in the car electronics market ended during the first four months of the year, and a modest turnaround may have begun, said most of the marketers and retailers surveyed by TWICE.
As for 12-volt specialists and A/V specialists, they are doing better than the market as a whole, multiple suppliers and retailers told TWICE. Some are posting gains anywhere from 10 percent to 40 percent as life slowly returns to the economy, and many report rising average selling prices (ASPs) to go with rising store traffic.
Suppliers and specialty retailers themselves attribute the specialty channel’s gains in part to fewer retail players in the market. They cite Circuit City’s liquidation in early 2009, the failure of other retailers, and a Best Buy that many contend has stepped up its focus on other product categories during the past few years.
“It’s too early to set off the fireworks, but pretty much across the board, everyone is having a very good start of the year,” said Alpine VP/GM Steve Crawford, referring to regional 12-volt and A/V specialty chains as well as authorized online retailers that he visited in recent weeks. These companies have posted gains of 10 to 30 percent year-over-year during the fi rst four months of 2010, he said.
Mike Cofield, president of the Mobile Electronics Specialists of America (MESA), said he has spoken with other 12-volt specialists who have cited gains of 10 percent to 40 percent during the first four months.
Harman Consumer also sees growth in the 12-volt specialty channel. Some measure of that might be due to the demise of retailers such as Circuit, admitted Chris Dragon, consumer and field marketing director. At the same time, however, some large retailers, including Amazon and automotive chain Pep Boys, have stepped up their mobile merchandising efforts, he noted.
Mobile electronics specialists might also be benefi tting from a newfound willingness in recent years to install products sold by online retailers, Dragon added. Dealers use the installation as an opportunity to sell add-ons as well as to turn the online customer into the store’s customer, Dragon explained.
For his part, Pioneer car electronics marketing director Ted Cardenas said he believes the overall market didn’t fall during the first four months of the year and that dealers remaining in the market after the retail shakeout “are probably seeing a slight lift.”
For these dealers, the hot categories are navigation, A/V head units without navigation, and single-CD players with built-in Bluetooth, HD Radio and iPod connectivity, Cardenas said. Internet radio is also in demand, he said, giving Pioneer the confidence to launch a second DVD-equipped double-DIN navigation head unit with ability to control the Pandora music-service app installed on a cable-connected iPhone. The flagship A/V nav unit, the $1,599-suggested AVIC-Z120BT, ships in June to join the $1,349-suggested 100 AVIC-X920BT, which shipped in April.
Audiovox Electronics president Tom Malone also sees modest overall industry improvement so far this year. Although car audio, multimedia and navigation are not posting dramatic gains, the industry downturn has stopped, and the market is exhibiting the “strongest positive feel in the past 18 months,” he said. In car video, he noted, the market has been “stagnant” for a couple of years, but sellthrough so far this year has been “fairly positive,” driven in large part by rising new-car sales.
For expediters, Audiovox sees demand growing for factory-look replacement radios, which are in the “early stages” of a “semi-resurgence” as consumers of select vehicles seek such features as satellite radio, Bluetooth, touchscreens and iPod integration if their new vehicle’s head unit lacks those capabilities. However, because of the expense involved in developing interface adapters to integrate these radios with a vehicle’s electronic systems, Audiovox is developing OEMreplacement radios only select car models, he noted.
David Jaques of Boston Acoustics also sees dealer sentiment improving. “The economy seems to be improving, and dealers are encouraged by the increase in store activity,” the car audio product and marketing manager said of the majority of the 12-volt specialists that he has interviewed.
As new car sales increase, some Boston Acoustics dealers who do expediter work have posted gains in that channel, Jaques added. He pointed to lower- cost entry-level cars that “tend to come with little to no factory radio option, which is pushing consumers to independent retailers for aftermarket audio.” The loss of Circuit storefronts is also a factor, he said.
From most of his specialty dealers, JL Audio marketing VP Manville Smith reported “significant growth,” with some dealers posting gains of anywhere from 20 percent to 50 percent. “Retailers are seeing more customers, and more customers are willing to spend more money,” he said. Part of the gains might be due to consumers unleashing pent-up demand, he noted.
E-commerce is helping some dealers boost their sales, he said. JL has seen sales double so far this year through its ecommerce site, developed by Shopatron to enable consumers to buy from JL’s Web site but have the order fulfilled by participating brick-and-mortar dealers.
Less aggressiveness by Best Buy in the mobile market is also helping dealers, Smith said. “Retailers don’t see Best Buy as a huge threat anymore,” he said.
At JVC, mobile entertainment marketing GM Chad Vogelsong called retail- level sales “strong” in February and March, though April was “a little softer,” perhaps because of income-tax e-filing, which puts refunds in the hands of consumers faster than if they filed paper tax returns, Vogelsong said.
Clarion marketing VP Adam Thomas also found dealer sales up, describing the upturn as “across-the-board modest growth” in the single- to double-digit percentage range. Clarion’s sales, nonetheless, “are up significantly so far this year,” he said.
Clarion is finding the most growth in in-dash multimedia-navigation head units, which are growing in awareness as portable navigation devices (PNDs) and OEM navigation systems proliferate.
Alpine’s Crawford agreed that indash navigation is posting the strongest growth in 12-volt. “People experience the OEM systems and realize it’s a much better experience compared to PNDs,” he explained.