Car Audio: The Numbers Don’t Tell the Whole Story

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car audio

Car audio and the many smaller categories that now fall under that heading can no longer be easily captured in product shipment sales offered by traditional agencies such as the Consumer Electronics Association (CEA), say a growing number of industry members.

Or at least, the numbers captured don’t tell the whole story.

First, for dealers, labor is becoming an increasingly large part of their revenues.   And labor is not tracked in revenue sales for the industry.

“Labor has grown as a percentage of car audio revenues over the years,” said Jim Warren Senior VP Merchandising of 50-store chain Car Toys. “Currently, at Car Toys, our labor revenue is over 20 percent of sales.” In Car Toys’ case, labor rates have remained steady but because average selling prices have dropped, labor is a greater percentage of sales.

But many retailers say they have increased their labor rates in recent years.  In the past many stores discounted labor because the products were so profitable.  With price competition from the Internet, now many stores discount the products and charge more for labor.

Second, the market has polarized into high end and low end product sales, according to many industry members.  And low end products, including low end CD players are less likely to be tracked by the CEA simply because fewer low end suppliers report their sales to the CEA.

‘If you give the category as a whole the benefit of the doubt, there’s a whole layer of entry level product from suppliers that don’t report sales to anybody or anything,” says Steve Witt, Vice President, Mobile Audio and Advanced Accessories at Audiovox

Third, the products themselves are harder to track.  The market has increasingly become a collection of niche categories.  Marine audio, for example, is not tracked by The NPD Group.  But it’s a growing segment of the market.  Motorcycle audio is a new segment as are products for ATVs.  Dealers are also increasingly making their own integration devices for iPads and iPhones, which are not tracked.

Products are also more difficult to define.  Is a backup camera/car kit for a new car model that’s very difficult to retrofit, an OEM integration device or a backup camera?

We’re certainly not faulting the data collecting agencies, but merely pointing out that the car audio market is increasingly a collection of niche products that may fly under the radar of research tracking.  And the true picture of the aftermarket may not be represented fully.

CEA forecasts that overall aftermarket autosound sales to dealers in 2013 will be up very slightly to $1,143 million, from an estimated $1,141 million in 2012.

First quarter sales to consumers fell 6 percent, according to the NPD Group.

Source: CEoutlook

Photo via Dow Electronics

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  1. Andy,

    With all due respect I am not certain that one can accurate describe the “real” car audio business, specially for the consumer. Consider this… For me personally my first car stereo was a Lear Jet 8-Track and a pair of 5.25 wizzer cone full range speakers. I installed that system with a hacksaw blade, tin snips, a hole punch and scotch tap. I actually upgraded the system with a cheapy pair of 6×9 pair of home audio book shelf speakers installed in the back using a 110v light switch to effect a “fader”. Forget about stereo the two different speakers were connected through the two connection light switch. Impedance…? Through the years I grew to experience different kinds of products and installation techniques (some better and some not). I am certain that some of the consumer who started out with bubble-packed nine dollar 6x9s grow to appreciate and actually purchase more sophisticated products. AND they may purchase these products from places other than Wal-Mart.

    As a specialty retailer (specially now with the current traffic count on the typical floor) I want the opportunity to talk to EVERYBODY who has an interest in car stereo and then help them grow their appreciation for what I am selling.

    Therefore I suggest we include ALL aftermarket sales (and opportunities) in our analysis as opposed to attempting to segment products and/or consumers into cut and dry categories. If we try to segment without a complete understanding of the actual market and its channels we risk making business decisions on flawed information.

    Perhaps when we get that right we should think about segmenting products and consumers.

    Ray Windsor
    German Maestro

  2. There is a greater diversity of products and opportunities available today than ever before. Margins on many of the core categories have fallen. Some have collapsed. But opportunities still abound. Retailers have to be teachers, and marketers, and expert installation technicians, and evangelists for what we can do. Clerking is what Wal Mart does.

  3. I guess my real point is that there are two car audio businesses. The low-end commodity car audio business which has been the focus of the data companies and the enthusiast business that has never been well represented. The commodity car audio business in the US is in trouble, but the high-end business will keep puttering along as it has for the last 30 years.

  4. And why should they work to improve the numbers? At the end of the day, there have to be customers for the data. As the business in commodity car audio products through huge retailers that report their numbers fails, the big companies that rely on data because no one in the company knows the business aren’t interested in buying the data. When all the sick people die, there’s no short term return for developing medicine…

  5. Good points were included in this article. BUT the article appeared silent on several good points…

    ONE: When NPD got into the business of measuring mobile electronics sales in the early ’90s they were not counting most of the places where consumers could make a purchase in the category. Now almost three decades later there many more choices for the consumer that are not being considered when measuring sales to consumers.

    TWO: When measuring wholesale business, smaller brands, and the un-admitted distribution channels of the larger brands, are not often considered.

    No question the numbers do not tell the whole story. I wonder if the numbers are getting better or worse at telling the story.

    Ray Windsor
    German Maestro

  6. The real car audio business has never been represented in any market data. Tracking the sales of five dollar six by nine speakers sold through Walmart has never been representative of the real business.

  7. Who’s making Profit on retail sales?
    My own son ordered a radio off the internet! Go figure. I could have gotten him one at dealer cost but adding tax would be more then if he got it online.

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