Aftermarket Car Audio On The Road Again

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Aftermarket car audio sales rose in 2010 for the first time in years and will probably do so again this year, retailers and suppliers told TWICE.

The turnaround is thanks to a better economy, rising used-car sales, more affordable prices on key technologies such as Internet radio, and young consumers enamored with the touchscreen interfaces of double- DIN car-A/V units, retailers and suppliers said.

The upturn could possibly accelerate now that, according to one supplier, some regional retailers plan to start advertising car audio again or boost what little advertising they did after cutting back in recent years.

“The exposure for car has probably never been less,” said Audiovox Electronics president Tom Malone about car audio advertising by retailers. More retail advertising will boost consumer awareness of all the new technologies that have hit the market in recent years and encourage them to upgrade older factory systems with iPod/iPhone control, Internet radio, Facebook integration and the like, he said.

Likewise, some dealers are considering modest expansions of board space for car audio, Malone said.

In 2010, aftermarket car audio sales rose at the factory level by an estimated 11.2 percent to $1.37 billion following three consecutive years of double-digit declines, the Consumer Electronics Association (CEA) said. The consecutive annual declines dragged down 2010 sales volume to less than half of 2006 levels, when sales rose 16.9 percent to $2.65 billion, CEA statistics show.

Mobile video sales, which include in-dash navigation, fell 5.7 percent to $345 million in 2010, CEA estimates.

Although CEA forecasts flat autosound sales in 2011, some retailers and suppliers are more optimistic.

Retailers of all genres “had a pretty strong year,” said Alpine VP/GM Steve Crawford. “Seven percent growth [in 2010] is probably not far off the mark, and we’re not getting the slowdown message in 2011 from dealers.” Based on “deep discussions with all retail channels,” he said, “there’s no indication that growth will slow down in 2011.”

Likewise, Audiovox’s Malone said regional retailers enjoyed “a little uptick in business” in 2010 and believe they will beat 2010’s numbers in 2011.

One of the drivers behind 2010 growth was rising newcar sales, but a very healthy used-car market also buoyed sales, Crawford said. Used-car purchasers look to replace a broken factory system or upgrade an older working system to add such new technologies as iPod control, Internet radio, or HD Radio.

Crawford agreed with ICE executive director Rob Elliott that double-DIN in-dash A/V systems without navigation enticed consumers into the aftermarket, particularly younger consumers who want to replicate their experience with iPod and smartphone touchscreens.

In-dash video without navigation “surprised a lot of people,” said Elliott. “A lot of people like the 6- and 7-inch touchscreens for the ease of use.” The screens, which also have a “cool” factor, let people swipe through album art and access content more quickly and easily, he explained. For some people, viewing iPod-stored video on the screens is a primary purchase motivator, he added. Some people also connect the head units to rear-seat video screens to play DVDs or iPod video, he noted.

Older consumers are also attracted to the touchscreens and can be more easily stepped into a navigation add-on at the time of sale, he added.

Alpine also found “a big increase in demand” for car- A/V units, especially among youth who will pay $300 to $500 for a head unit rather than spend $900 on an all-in-one A/V-nav unit, said Crawford. Younger consumers are also more comfortable using smartphones for navigation and don’t want an in-dash navigation unit or even a portable navigation device (PND), Crawford said.

All-in-one A/V-nav units enjoyed an uptick in 2010, Crawford added. These products skew toward older customers who probably had an OEM system and prefer the ease-of-use that they provide compared to PNDs.

Also boosting aftermarket sales is the e-commerce channel, whose “sales got on the map in 2010,” Crawford said, noting that Alpine doesn’t sell that channel.

ICE also contributed to its members’ 2010 growth with support services and marketing programs, Elliott said. More than half of ICE members reported that 2010 sales were up on average 25 percent in 2010, and “those members who make the most use of ICE tools are the ones reporting the highest increase in business.” The tools include a website designed to send prequalified customers to members’ stores, a hosted and weekly updated website for members, and a high-definition commercial that individual members wouldn’t have the resources to create for themselves, Elliott said. Last year, ICE also launched a consumer publication distributed by ICE to the waiting rooms of local businesses near members’ locations.

ICE, which has more than 185 member storefronts in more than 40 states, provides group marketing services and enhanced vendor programs.

Members’ momentum will continue in 2011 with the dramatic expansion of Internet radio into a wider range of head units at more affordable prices, Elliott said.

OEM integration “has gotten stronger,” Elliott also said. “Retailers really embraced it,” and the No. 1 integration feature is adding iPod control to a factory radio that lacks it. Once those consumers are in the door, dealers get the opportunity to add HD Radio, satellite radio or hands-free Bluetooth, he said.

Also driving up sales are lower prices that helped expand the customer base, Elliott said. The trend was driven in part by suppliers bringing out products at lower price points. Although prices are “still a little lower than we’d like them to be,” he noted, “our guys are good at adding onto a sale.”

For his part, Mobile Electronics Specialists of America (MESA) president Mike Cofield said his group’s independent-specialist members were up 2 percent to 20 percent, all categories combined, in 2010. Although the year is young, “no one is crying the blues,” he said. “I had a good January, but February was weak because of the Texas snow,” he said of his 16-store Custom Sounds chain with 11 stores in Texas.

Though multiple categories enjoyed growth, one that either didn’t grow or didn’t meet expectations was the mech-less head unit, said Audiovox’s Malone. “It seemed to make sense. Why does an 18-year-old kid need CD?” Malone asked. But kids or their parents still want the slot, and in many cases, mech-less models cost the same or more as CD head units because of the addition of touchscreens or flashier cosmetics, he noted.


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