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12-Volt, A/V Specialists Gain In Car-A/V, Nav

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.