Aftermarket Mobile Audio: What's Next

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NEW YORK –

Aftermarket autosound, A/V and navigation sales were pummeled in 2009 by a perfect storm caused by a tanking economy, rising OEM competition, and the continuing shift in expenditures by younger consumers toward anything related to PCs, iPods and games.

In 2010, the storm calmed, but the water remained choppy.

To assess where we’ve come from and where we’re headed, TWICE asked marketers from several 12-volt companies to discuss key aftertmarket topics. Here’s what they said:

TWICE:

How did the mobile electronics aftermarket fare in 2010 at the retail level in dollar volume?

Keith Lehman, Kenwood:

Dollar volume was either flat or down, according to many dealers. Many reported that while sales volume was challenging, profitability was on the increase due to lower overhead, greater efficiencies and better inventory management. This was about what we expected.

Regarding the outlook for 2011, we expect to see a slower industry decline. In-dash navigation has been a major business generator along with entry-level multimedia and all types of in-dash CD. Speakers and amplifiers have been extremely tough.

Larry Rougas, Pioneer:

The year 2010 fared a lot better than Pioneer had planned following what the CE industry experienced in 2009. For Pioneer, our A/V category experienced the most success in 2010 because we hit the “sweet spot,” offering the right features at the right price points. Our in-dash navigation lineup also experienced similar success, the AVIC-X and Z-series navigation systems bring the most advanced in-car entertainment features into the dash, and with expanded connectivity, such as Pandora via iPhone and Bluetooth connectivity, it made them a top choice for connected users.

Adam Thomas, Clarion:

The speaker category excelled in 2010 and is up double digits in year-to-date dollar sales. In-dash autosound and amp shipments are up slightly over the year-to-date through October in units and stable in dollars.

2011 will continue to see growth in navigation products through the specialist channel. Whether this is single- unit navigation or with black boxes will depend on the specific channel. Bluetooth will continue to be a demand feature as most consumers are looking to integrate their phone in this basic manner. CD will continue to be challenging as the overall industry sees price compression in all source and video units.

TWICE:

Did any distribution channels fare better than others in 2010?

Lehmann:

Mobile electronics specialists and e-commerce were the best channel performers in 2010.

Rougas:

Our independent specialist retailers and regional accounts did an outstanding job this year coming off such difficult economic conditions in 2009. We were also very pleased with the performance of our distributor channel as well.

We expect that 2011 will continue to be a challenging year. Economic recovery is taking longer than we would all like. Thus, Pioneer’s focus will be to continue to work closely with all of our channels of distribution and offer them the right tools needed for a strong 2011.

Thomas:

Clarion’s distribution focus remains primarily on the 12-volt specialist. We did see more of an increase to this channel through our distributors.

TWICE:

What features or technologies were in highest demand in 2010, and what do you expect for 2011?

Lehmann:

We see continued demand for new technologies such as Internet radio control, HD Radio and control of digital content from mass-storage devices (such as the iPhone, Android phones, portable hard drives and thumb drives). Bluetooth is still very strong, and interest is gaining in audio streaming. Satellite radio continues its decline in the aftermarket due to higher interest in Internet radio and HD Radio, with the subscription- based [satellite-radio] model continues to struggle.

Connected navigation technologies have gained mainstream awareness, and we will see more of this in 2011. Marine product sales have surged a bit in 2010, and more companies will likely get into the game. Some have said that driver-assist products such as FLIR and lane guidance will be more popular, but I think this will be somewhat limited to the expeditor channel.

Consumers will continue to enjoy very high value from 2011’s selection of mobile electronics, with retailers becoming more creative in their assortment of products and services, such as window tinting, vehicle detailing, breathalyzer ignition lock installation, and so on.

In November at the SEMA show, dealers were more positive about 2011 than they were before. New- and used-car sales are expected to grow in 2011, and that pent-up demand will drive sales of tinting, seats, and maybe some audio and navigation business.

Rougas:

Pioneer has always been among the leaders in developing audio and interactive technologies in the car. In 2011, Pioneer will continue to improve integration, connectivity and ease of use, and will follow consumer trends in the U.S., such as the increased popularity of Internet radio, Bluetooth, HD Radio and even socia- media networking. Pioneer will continue to focus on making driving and being in the car more enjoyable and convenient and strive to enhance the consumers’ driving experience, without compromising design or safety.

Thomas:

iPod/iPhone compatibility will pretty much be mandatory in the future for all but the entry level. HD Radioready for the majority of models is required by the market, especially in mid- to high-end models. Bluetooth is gaining in popularity, especially on high-end products like A/V-navigation in-dash units, A/V multimedia units and for some CD.

In the next few years, the following will be key: One is OEM integration solutions for people who increasingly want to keep their factory radio but increase connectivity and sound quality. Another is smartphone control, not only for Internet radio but also enhancing the entire mobile experience with real-time connectivity and LBS. Simple app control like Internet radio will be more and more common on mid- to high-end products. Bluetooth will be more prevalent and affordable, driven by convenience and local/state legislation. HD Radio built-in will become more prevalent and affordable. Digital media receivers (mech-less) will be more prevalent, however, still years away from overtaking CD receiver sales.

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