Broadcast Sources Gaining In Car

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Sales of head units with built-in HD Radio and Pandora Internet-radio control are rising — at least through stores with assisted sales floors, suppliers and retailers told TWICE.

And aftermarket satellite radio has the potential to follow suit with the recent launch of the universal SiriusXM tuner and the planned launch of satellite radio 2.0 service. The hide-away universal tuner reduces the cost of adding satellite radio to a satellite-ready head unit and adds many features not available before in most hide-away tuners. Features include song alerts, artist alerts, sports-game alerts, iTunes tagging, and embedded memory to pause and rewind a program up to 30 minutes. In addition, only a handful of OEM satellite radios offer some of these universal-tuner features.

Satellite radio 2.0 service, due to launch in the coming weeks, adds more channels and more Hispanic-oriented content than current tuners. The service will be available first in transportable plug-and-play tuners in the coming weeks followed by availability next year in OEM systems and in a next-generation universal aftermarket tuner.

A desire to discover new music is the likely reason behind the HD Radio and Internet radio gains, and that desire could be a factor that helps reverse the slide in aftermarket satellite-radio sales, suppliers and retailers said.

“Listening to broadcast media is up again,” said Pioneer marketing director Ted Cardenas. “With an iPod, you’re listening only to your music collection.” With HD Radio’s multicast feature, satellite radio and Internet radio, on the other hand, consumers can expose themselves to music that they might not have heard before, he noted.

Said Jim Warren, senior merchandising VP of the Car Toys 12-volt chain, “Content is driving demand. It’s pure and simple.” Whether HD Radio, SiriusXM or Pandora, he said, “Consumers completely get it, and they are very motivated to replicate their content experience throughout their lives.”

The picture for head units that tap such broadcast sources, however, might not be completely rosy. Consumer Electronics Association (CEA) statistics show factory-level sales of in-dash CD head units with built-in HD Radio slipped 34 percent to 875,577 through August out of total sales of 4 million CD head units, which were down about 1 percent. CEA doesn’t track multimedia head units with built-in HD Radio. Sales of all multimedia head units were up 52 percent to 385,360 units.

The CEA-reported decline in HD-equipped CD head units might be attributable to a sales shift in which under-$ 100 head units have grabbed a higher percentage of sales through all distribution channels, thanks to a flagging economy and aggressive price moves by some suppliers, one supplier said.

Not all suppliers, however, are convinced that sales of HD Radio-embedded head units are down. Pioneer’s Cardenas points to a growing selection of heads with built-in HD Radio and noted that Pioneer’s sales of such models have gone up, as have the sales of several competitors’ models.

Whatever the overall HD Radio sales picture, multiple suppliers and specialty retailers believe sales of HD Radioembedded head units are rising through assisted sales floors, even if only slightly, thanks in large part to a price premium of only $10 to $20 vs. comparable CD receivers with analog tuners. In 2009, that premium was about $50, suppliers said.

Most of the HD Radio gain is coming in markets where large clusters of stations are broadcasting HD Radio signals, suppliers and retailers noted.

All Car Toys stores, for example, are in such markets, and the majority of head units sold by the chain incorporate embedded HD Radio, said Warren. The majority of the chain’s head-unit SKUs also incorporate HD Radio, he added.

“In a fully or semi-managed sales floor, it’s not that difficult to step customers up,” said Kenwood senior VP Keith Lehmann.

“It’s an easy step,” agreed Progressive Retailers Organization (PRO Group) executive director Dave Workman. Although consumer awareness is relatively low, and no one comes in asking for HD Radio, once a salesperson explains the feature and its benefits, “the adoption curve is good,” he said.

Said Rob Elliott, executive director of the In-Car Experts (ICE) buying group, “When there’s a good assortment of appealing HD Radio stations, the dealer will pitch the HD Radio version and have no problems getting the additional dollars as long as he demos it and makes the consumer aware.”

The same scenario applies to head units that control most of the functions of a Pandora Internet radio app on an iPhone that’s connected to the USB port of an iPod/ iPhone-controlling head unit, Elliott said. Salespeople can take consumers up about $30 when they pitch a head unit with Pandora control and other step-up features, he said.

Specialists also see sales of Pandora-controlling head units rising in part because the feature is available in more head units at prices starting at about $130. Although CEA couldn’t provide a comparison with last year, CEA statistics show about 6 percent of the 4 million CD receivers sold through August at the factory level controlled an iPhone’s Pandora app.

The incidence of Internet radio streaming in the car, however, could be greater than those statistics indicate. Any head unit connected via USB to an iPhone can stream Internet radio, even if the app must be controlled from the phone’s touchscreen. In addition, any head unit with an aux input can stream from any connected smartphone.

For now, however, only a minority of consumers stream Internet radio through a car stereo, but most of them are the younger consumers who make up the primary aftermarket demographic, according to a July survey by Arbitron, Edison Research and Scarborough. The study found that 19 percent of respondents ages 18 to 24 listen to Internet radio in the car.

For dealers of any stripe, aftermarket satellite radio has been on the decline because almost all new cars sold today come with OEM satellite tuners, but that could be changing. For some specialists, including Car Toys, sales of aftermarket hide-away tuners are rising.

The specialty chain cites the new SiriusXM universal tuner, which is controlled from select head units available from Sony, Alpine, Dual and, next year, Kenwood. “We are seeing steadily rising demand for the new tuners and expect this to increase further as additional features are released,” said Warren. “The new tuner’s size eases installation, while the new price point is resonating with the consumer.”

ICE’s Elliott also sees upside potential for the universal satellite-radio tuner. “SiriusXM will play a bigger role than ever in the very near future” through 12-volt specialists, he said. With the universal tuner, he said, “now there’s something new to explain.” In addition, he said, “SiriusXM is getting more in sync with independents.”


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