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Select Retailers Outperforming Car Aftermarket


The mobile electronics aftermarket
started the year more slowly than last year, but mobile
electronics specialists, online retailers and A/V
specialists that focus on the category have fared better
and in many cases have continued to grow their
12-volt sales, industry participants told TWICE.

The 12-volt sales and market share of big-box retailers,
on the other hand, continued to slip and will
likely continue to do so, as they look to shrink their
store sizes, reduce 12-volt selections, and scale
back low-end price points, some marketers said.

For the full year, some suppliers expect the aftermarket,
at a minimum, to decline at a much less
rapid pace if not post gains. Last year, factory-level
dollar sales fell 13.3 percent to $1.29 billion, including
mobile video and in-dash navigation, Consumer
Electronics Association (CEA) statistics show. CEA
forecast the dollar decline slowing to the low-singledigit
level in 2012. The aftermarket’s 2011 factorylevel
dollar sales decline followed a 2010 gain of 3.7
percent and a 22.5 percent dollar decline in 2009,
CEA said.

“Any retailer promoting the category is doing
well,” said Alpine assistant sales VP Mike Anderson.
“We’ll grow this year in the growth areas and with
dealers who are really focused on the category.”

Reasons for this year’s expected improvement, despite
a slower first-quarter start, include continued growth in
A/V head units with touchscreens. Sales of these products
are triggering step-up sales from audio-only single-
DIN head units, suppliers and retailers said. Marketers
also see continued double-digit unit gains in head units
with USB or Bluetooth control of smartphone-stored music
and Internet-radio apps. Amps are expected to continue
growing in units and dollars.

Other reasons for expected improvement include the increased
age of vehicles on the road as well as continued
growth in new-car sales, which aid retailers that expedite
products to new-car dealers. Rising new-car sales also,
paradoxically, enhance potential aftermarket navigation
sales because OEM nav systems are bundled with expensive
options packages that many consumers don’t want to
pay for, suppliers said.

The aftermarket’s expected improvement is also tied
in part to last year’s tightened supply of select products
from select suppliers because of shortages caused by
the Japanese tsunami and Thailand flood, said ProSource
president/CEO Dave Workman. As a result, select vendors
“pulled back on promotion,” he said.

For the year to date, CEA statistics show factory-level
aftermarket dollar volume falling less than 1 percent in the
January through February period to $198.7 million. Available
NPD retail-level statistics show dollar sales of speakers
down 6 percent through March, amp sales down 8
percent, and in-dash fixed navigation units down 9 percent.
Other in-dash statistics were unavailable.

Last year, NPD found retail-level gains in units and dollars
in amps, speakers, and A/V head units. A/V head-unit
sales rose an unspecified amount, while amp sales rose
5 percent in units and 4 percent in dollars. Speaker sales
rose 8 percent in units and 5 percent in dollars, NPD said.

For the coming year, CEA forecast a 5 percent gain in
amp sales to $164 million, with speaker sales slipping 1
percent to $333 million. Overall head-unit sales, excluding
in-dash navigation units, will slip 1.7 percent to $468
million, CEA said.

A/V head units, nonetheless, will continue to rise in
units and dollars in 2012, multiple suppliers said.

Retailers performing the best last year and so far this
year have been 12-volt specialists, Internet retailers with
stellar online customer support, and A/V specialists that
remain focused on the category, some suppliers said. Indeed,
12-volt specialists as a group might be posting 12-
volt sales gains so far this year, or at least holding their
own better than other sales channels.

“We’re getting pretty positive feedback from retailers,
particularly from independent specialists, primarily 12-volt
specialists,” said Anderson.

Although Alpine and Clarion said it’s hard to tell whether
the12-volt specialty channel is posting sales gains this
year, the specialists are certainly increasing their share of
the business, said Ben Arnold, The NPD Group’s industry
analysis director. “The mass channel is losing volume
much quicker than the mobile electronics channel,” he
said. “We’re not seeing sales increases in the specialist
channel, per se, but they are holding on to sales better
than mass.” Mass retailers, Best Buy in particular, he explained,
are “looking to shrink the size of their stores [and
offer] fewer ‘opening price point’ SKUs in favor of ones
that pull in more revenue and more profit.” Arnold said he
“would expect this type of thinking to extend to the 12 volt
category as well.”

Larry Rougas, marketing and product planning senior
VP for Pioneer’s car division, sees specialists gaining
share, at least in dollars. He attributed that “to the differences
in product mix between the various distribution
channels.” Historically, he explained, “the 12-volt specialty
retailer has placed a greater emphasis on products that
have higher levels of features and technology, which also
carry a higher average selling price. Combined with natural
price compression, we see some distribution channels
declining in total dollars even though their quantity volume remains steady, while other channels maintain
or grow their sales in dollars by leveraging the
latest ‘premium’ features and technologies.”

Other retail channels gaining share, if not
sales, in 12-volt products include “high-quality
Internet retailers,” such as Crutchfield and the
online stores of Car Toys and Al & Ed’s, said
Alpine’s Anderson. Internet retailers are doing
well if they “pay attention to the category and
extend their consumer experience from their
stores,” he said.

Clarion’s Thomas agreed that online retailers
increased their share in 2011.

For his part, Mike Cofield, president of the
Mobile Electronics Specialists of America
(MESA), said sales through his group’s members
are “good” so far this year. “Everyone I’ve
talked to is doing well this year,” he said. The
group’s members operate more than 100 outlets.

ProSource’s Workman believes sales
through 12-volt specialists and A/V specialists
are up so far this year, as they were last year.
“The big guys don’t chase sales as hard and
are losing share in a declining market, and the
rest are seeing solid gains year over year,” he
said. Among ProSource’s Progressive Retailers
Organization (PRO Group) dealers in the
12-volt business, car audio sales have posted
year-over-year double-digit dollar gains since
the first of this year and single-digit 2011 gains,
he said.

For PRO Group members, the gains are
across-the-board in amps, speakers and head
units, Workman said of year-to-date sales.
What’s driving consumer interest are head units
that integrate with smartphones and A/V units
with large displays, he said. Clarion, Alpine and
Pioneer concur on the strength of these headunit

Alpine’s Anderson attributes rising sales of
A/V head units to price-point compression.
“The price of an entry-level unit is down to the
point that $300 gets you a tier-two A/V player,”
encouraging consumers to step up from a highend
CD player, he said.

Smartphone connectivity is the key to A/V
head-unit sales, Pioneer’s Rougas said. In fact,
“anything that leverages the connectivity buzz
is hot: smartphone connectivity, Internet or
streamed media, networked navigation or data
services, Bluetooth, etc.”