CEA: Car Electronics Stuck in Reverse

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We hope you are sitting down for this one.

The Consumer Electronics Association (CEA) says sales of retail car electronics will decline by 10 percent this year and then by 5 or 6 percent each year through 2014 (in shipment revenues).

A newly revised forecast shows the aftermarket contracting from wholesale shipments totaling $2.09 billion in 2009 to $1.51 billion in 2014.

Included in these numbers are Bluetooth headsets–a pretty large sales category. If you remove the headsets, the total car aftermarket drops to $1.28 billion in 2009, $1.1 billion in 2010, falling to $789 million in 2014. Not pretty. For years this business hovered around the $2 billion wholesale mark, so it is now at half that level.

OE integration kit revenues (excluding the Bluetooth headsets that were lumped into this segment) will fall from $202 million in 2009 to $149 million in 2010 to $134 million in 2011 and then increase to $142 million in 2014. Total head units will decline by about 13 percent a year from $487 million to $246 million.

Amplifiers should shrink about 22 percent this year, slowing to an average of 7 percent declines per year after that through 2014 moving from $157 million to $92 million. Total speakers will decline from $366 million to $263 million in 2014.

CEA concludes that the aftermarket is “stuck in reverse” as “the market opportunity for the classic ‘deck and four’ continues to diminish. Overall revenues here are projected to fall 10 percent by the end of this year, driven by deepening unit declines in several autosound sectors. An even less promising part of the equation involves the lack of a game-changing new product on the immediate horizon. “

Our take: at any point, a company can develop another “FM converter.” To some extent this business started in the ’70s with an FM converter you slapped onto to the AM radio that came with the car. The last “FM converter” we had was satellite radio. It’s time for another one.

We’re dreaming of a device that reads back your email and texts via Bluetooth off your phone in safe manner and lets you respond by voice. If it were executed well, it would be safer than sneak peaking at your phone while driving.

We’ve also advocated that car AV specialists work with local independently owned Apple shops and phone stores.

Source: CEA

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10 Comments

  1. I guess I don’t understand how the aftermarket “business” is doing so bad on a national and/or international level when it is booming here in Marquette, MI. I mean, the population of this community hovers around 29,000 people while college is in session but you would think that we were catering to a population in the millions with all of the business transactions we do.

    I don’t know about the rest of you people, but I for one am not worried about the next 10 years……I know in my heart I will be taken care of by MY business, at least that’s what the highly educated entrepreneurs that I associate with tell me.

  2. One thing that there has never been a shortage of in the 12Volt Industry is PASSION!

    Some of it may be misguided and focused in the wrong direction because too few people are willing to look in the mirror and in addition to “everyone else” as they try to “figure it out”. No one “thing” will make the industry “successful” again and there are certainly elements in all the above that are necessary (even critically so).

    All parties must be willing to educate themselves before rushing to judgement about who does or does not care, why companies make the decisions they do and where their businesses actually fit in the marketplace (both in relevance and impact). Once really understood, then progress can be made…

  3. Yes……lots of good suggestions in all of your comments. And yes, the basics like a clean store and fully stocked shelves and displays help for a complete buying expereince. But lets face it, the profit in our industry has left due to over distribution and thus many of the industry’s key people…..Reps, sales staff, installers and so on. If they can’t make any money, they aren’t going to stick around. Look, if the manufacturer’s like Sony and Pioneer had not gone into mass distribution and wouldn’t have sold out to the auto manufacturers like JBL and so on, we would be in alot better situation. When products hit mass distribution…….they tailor their products to the masses. Not hard to figure out. Now what do you think would happen to product lines like Gucci and Prada if they showed up at JC Penny or Wal-Mart. They would have a huge spike in business but they would have to drop their pants in order to get people in those demos to buy their product. Every purse carrying woman wants one. That’s what all the women in Hollywood carry and trust me, if Carrie Underwood is seen with one, they all want it. Just our problem. The people that we have partnered with have shot themselves in the foot and thus ruined the profitability of our industry. Why would someone come into my store and purchase a CD player from me at $179 when they can buy a CD player that looks very similar to mine for $99 from Wal-Mart? They don’t. Do you realize that we are trying to compete with Wal-Mart? Now, you’re probably saying that Wal-Mart has had 12 volt for 15-20 years! Yes, they did……Sparkomatic, Jensen, Pyramid. Now they have Sony, Pioneer, Kenwood and so on. REALLY! Once you go to mass distribution the profit goes right out the window. Look at cellular, computers and such. The only way anyone makes any money is by service plans and accessories. Don’t see how we can provide a service plan in our industry that someone will purchase. We all need to face reality. If our products are in these mass retailers and all over the internet, most people aren’t gonna bother with going into the “specialist” stores. If a guy can sit in his underwear and order the same equipment that he sees in Shaq’s car off of the internet……yep, not gonna see that customer in my store. Your phone will ring when he wants it installed and wants to hold you accountable for the product that he didn’t buy from you. Thus, making the specialist disposable. Something disposable has no value. I guess chew on these thoughts for a while. Not that it will change our industry……

  4. While I can appreciate some of the suggestions made here, I don’t think our focus should be on cleaning your parking lots, and shining up our floors is what is going to turn this thing around. If you’re not already doing those things, you shouldn’t be in the business anyways…

    What we need is innovation and drive. Right now, it’s not there at the manufacturing level. We have let the OEM’s, and Big Box Stores determine our futures by ignoring the needs of the specialist. When was the last time a product was so exciting in our industry that people lined up outside the door for hours ahead of opening?? (see: Apple iPad, iPhone, etc. etc.)

    My two cents anyways… Salesmanship should be addressed, because it has gone out the window, but it might be easier if there was truly something to get excited about.

  5. I AGREE WITH EVERYTHING SAID ABOVE. THE WHOLE 12VOLT INDUSTRY EXPECTS CONSUMERS
    TO COME THRU THE DOOR AND DROP THEIR MONEY. TAKE A LOOK AT THE PAST 4 YRS AT CES
    CAR AUDIO NORTH HALL IS SHRINKING ATTENDANCE IS DOWN. PRICES ARE WAY TO HIGH
    AND CEA DOES NOT CARE ABOUT CAR AUDIO AS A WHOLE WERE JUST A FILLER
    AT CES THEY MAKE ALL THERE MONEY FROM HOME AND SO ON.
    CAR AUDIO NEEDS IT OWN SHOW LIKE SEMA HAS.
    WE NEED ONCE AGAIN TO INVITE THE CONSUMER INTO THE SHOW
    FOR SAY 2 DAYS LET THEM SEE CAR AUDIO AND HEAR IT AND GET
    THEM EXCITED. AND HAVE 5 SHOWS 1 IN LAS VEGAS, 1 IN CHICAGO
    1 IN NEWYORK 1 IN FL AND 1 IN TX.
    EA LOCATION YOU HAVE THE MANUFACTURE WITH BOOTHS AND YOU HAVE THE STORES
    MAKE THE CARS FOR THAT SHOW SO CUSTOMERS SEE THE WORK AND EQUIPMENT ALSO
    FOR 2 DAYS YOU MAKE FOR DEALERS AND DIST ONLY TO SHOW UP TO SEE NEW PRODUCT
    WITH REPS AND IN A SMALLER VENUE WHERE WE ARE NOT SPENDING ALOT OF MONEY MAYBE WITH THE 5 SHOWS MAYBE WE CAN SPEND SAME AMOUNT AS MONEY AS WE WOULD S[PEND AT CES. THEN WE WOULD PICK ONE SITE AS THE INTERNATIONAL MARKET COULD COME TO AND SEE ALL NEW PRODUCT OR WE GO TO THEM. THERE IS A SHOW IN GERMANY IN APRIL OR MAY
    AND ALOT OF THE INTERNATIONAL MANAGER SHOW UP TO THAT SHOW AND SHOW EUROPEAN CUSTOMERS WE DO ALREADY BUT NEEDS TO BE MORE COMMITMENT FROM OUR SIDE FOR OUR INTERNATIONAL CUSTOMERS.
    WE ALSO NEED TO START APPLYING PRESSURE TO THE CAR MANUFACTURES TO HAVE MORE CARS SO WE CAN PUT AFTERMARKET EQUIPMENT IN AND LOBBY CONGRESS INSTEAD OF
    TRYING TO GO TO BED WITH THEM AS THEY MAKE US WEAKER LIKE SAMPSON AND DELIA
    BEFORE IT WAS EASY FOR US IN THE 80S TO GET THE AFTERMARKET OEM CAR AUDIO WAS HORRIBLE AND MY OPION STILL NOT THAT GREAT

  6. The vehicles driving into the shops today present more difficult challenges than ever before. They are more complicated to work on and they already provide a user experience that takes many potential customers right out of game. This is the brutal reality.

    However- the better 12 Volt retailers aren’t selling products. They’re selling themselves… their store..their installation. They’re influencing their customer’s perceptions of what’s cool and what’s now. So long as they maintain this “proprietary” relationship with their customers then finding something to sell them is secondary. That’s how many of them successfully segued from car installation into custom home installation. They already owned the trust and mind share of their customers.

    Easier said than done..no doubt. But if we, the Mobile Electronics industry allow ourselves to fall victim to our own strategic inertia..operating and thinking the same way year after year then we’re done. Yes the economy is down but there’s still a ton of business out there. But none of us will get a piece of it by sitting in our comfort zones; and that goes equally for manufacturers, reps, distributors and retailers.

    Dan Beggs
    Opus Marketing Group

  7. The “work with independent Apple stores” idea is a great one and already being employed by a few installing specialty retailers. That being said retailers who intend to engage should first visit those stores and play consumer. The goal of this exercise is not so much to interview the Apple store, rather it is to learn the kind of expectations and level of experience that they establish and then typically exceed for their consumers.

    Installing specialty retailers have to step up their game in order to become the compelling choice in a world where consumer choice is abundant. Below is an excerpt from a recent newsletter sent by German Maestro…

    “Provide the consumer with an experience the competition cannot hope to equal”.

    1. Clean parking lot: No bags, beer bottles, discarded wire harnesses, plugs and certainly NO SCREWS.
    2. Inviting entryway. Remove the cobwebs from the doorway corners and window sills.
    3. Greet but do not smother the consumer as he walks into the store.
    4. Qualify the consumer. Learn what he knows before trying to teach him what you know. Learn from him where he gathered his knowledge; friends, your competitor…
    5. Create expectation. Teach the consumer something in addition to what he already knew when he entered your store. (create demand for those services and products which you can sell profitably)
    6. Present your brand, services and products in that order. No holes in the displays. All the light bulbs work, etc… Insure that the services and products you present exceed the expectations you have created for the consumer.
    7. Ask for the sale. If you have qualified, created expectation and presented well, you will be able to overcome objections and secure the consumer’s confidence and trust.
    8. Deliver the consumer more than he expects from his trust in you. Demonstrate the system with confidence and a smile. While you are sitting in the car with the consumer, tuck a business card in the owner’s manual and hand him another card.
    9. Instruct the consumer to tell ALL of his friends about you and your store. If you ask him for this courtesy he might actually take a moment to do it.

    If you are reading this issue you know that these 9 points are very rarely delivered by any retail establishment, restaurant, jewelry store, appliance store, pet store, sporting goods store, clothing store, whatever… where you have been a recent patron. When these 9 points are successfully executed by such a retailer, you remember.

    Take a moment to reflect on your store’s record of consistently delivering on these 9 points. Commit to be that installing specialty retailer who is remembered by the consumer.

    Be the COMPELLING CHOICE for your consumer by providing him with an experience your competition cannot hope to equal.

    Ray Windsor
    President
    German Maestro

  8. Those of us in this industry for the past 20-30 years have seen the ever-steeping decline of our business since the year 2000. OEM integration is going to be our last-ditch effort to even grab a piece of the 12-volt action, before the business finally dies off.

    With so many vehicles being produced nowadays with proprietary dashboard configurations, computer controlled modules running everything and needing to “see” the status of other modules in the vehicle, our days of 12-volt analog integration are close to ending.

    Our aftermarket companies need to re-evaluate and redesign products, with a much larger focus on computers and vehicle bus-system integrations. The dash kit manufacturers are giving it their best efforts, and producing never before thought of dash solutions, but even they are going to face mounting pressure to keep up with the OEM designs, which are constantly and evermore forcefully slamming the door on them. They too will be losing market share as more people will not consider a $300 dash kit for a $200 radio.

    Many of the big 5 radio maunfacturers have OEM contracts to build the very radios we are trying to replace or integrate with for the auto comapnies, and they really are helping the decline with their own aftermarket divisions. They should be negotiating better terms with the auto companies, or at least leaving some sort of system in place where SOME aftermarket accessories can be integrated seamlessly by us professionals into their OEM designs.

    Alarm and remote start companies need to leap forward and start bringing the focus to computer controlled, digital integration of their products. We’re basically installing items designed on 30-year-old analog “technology”, whereas today we should be able to have a 4-5 wire hookup with a data port to integrate into the already existing vehicle bus-systems for security/remote start, programmable by an installers laptop. The release of the new GM Onstar app mentioned in this same CE Outlook letter shows that as well. Everything in most modern GM vehicles, with the exception of a few entry level cars, have all of these systems in place, and would just need some aftermarket programmers to decrypt code and come up with more programmable solutions for us to stay alive.

    Yes, the death of the 12-volt industry is on the horizon, and in 10 years there will most likely be nothing left for us to do, unless we and the products from the 12-volt companies we sell, can re-invent the wheel and show the validity of why we came to be in the first place.

    Let the digital age of 12-volt begin, and dive into the deep end of the pool, not just stand on the shallow end, dipping our toes in with trepidation.

  9. The greatest product innovations in the world counts for naught if nobody knows about it. 12 volt was once a vibrant forward thinking community. It moved forward primarily on the positive buzz created by enthusiasts. And because there were fewer (legal)outlets upon which to spend disposable income. Then came computers, smart phones, iPods, video games, and more. No product or category will “sell itself” in today’s world.
    Get used to it folks! Either learn to work together to grow again, or face slow death by attrition. For most, there is no in between.

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