SEMA News - December 2009

By Megan McKernan

Market Update

SEMA NEWS-DECEMBER 2009-RESEARCHOther than powertrain components that have to coexist with vehicle on-board computers, mobile-electronics components can often be the most complex specialty-equipment accessories added to a vehicle. The key to success in this market is the ability to convince enthusiasts and consumers alike that they have to have these cool products on their vehicles.

Market for Mobile Electronics

As of the end of the first quarter of 2009, there were a total of 241 million vehicles registered in the United States. This presents countless opportunities for not only the mobile-electronics market, but for the specialty-equipment market as a whole. The task is not often easy, as automobile manufacturers have been producing cars with more sophisticated options than ever before. Built-in navigation systems, backup cameras, heated seats and luxury stereo systems are just a few examples of accessories that consumers now have the option to purchase for their vehicles directly from car and truck manufacturers. In order to get an idea of the opportunity for mobile-electronics manufacturers and installers, it’s important to look at what is actually being offered by the automakers themselves.

Tables 1 and 2 list factory-installed products on 2009 model-year cars and trucks produced in North America. This is not the complete picture of the potential market for mobile-electronics products, as the data does not include vehicles produced outside of North America, but it definitely provides a good starting point.

SEMA NEWS-DECEMBER 2009-RESEARCH
SEMA NEWS-DECEMBER 2009-RESEARCH
Tables 1 and 2 list factory-installed products on 2009 model-year cars and trucks produced in North America.

 

The market for mobile electronics has been described as one of change. Kevin Campbell of Stillwater Designs, most commonly referred to as Kicker, had some great insight into this market as both a SEMA member and a manufacturer. He said that the desire of consumers to take their music with them has made iPod and MP3 connectivity more important and head units in vehicles passé. With many consumers making the decision to hold on to their vehicles longer in the slow economy, the hope is that more upgrades will be made to vehicles, including audio components.

“In terms of system trends, consumers respond most to simple, inexpensive upgrades that enable them full use of their MP3 players and the players’ features,” Campbell said. “Navigation and hands-free phone capability are big priorities as well. Full audio-system upgrades are rare in this current economy.”

  SEMA NEWS-DECEMBER 2009-RESEARCH
 

Table 3: SEMA’s 2008 Automotive Lifestyles Survey results provide a great picture of the types of mobile-electronics products that enthusiasts have purchased or plan to purchase for their vehicles.

In an age of smartphones, MP3 players that allow people to take their music with them everywhere and the constant need to be in touch with others via social-media outlets, the mobile-electronics market could certainly witness some significant innovations in the next several years.

Enthusiast Preferences

SEMA’s 2008 Automotive Lifestyles Survey results provide a great picture of the types of mobile-electronics products that enthusiasts have purchased or plan to purchase for their vehicles. The most popular accessories already purchased for vehicles are stereo-system components, followed by GPS navigation systems and satellite radio (see Table 3 for complete results).

Enthusiasts were asked when accessories were purchased relative to the purchase of the vehicle. Seven percent indicated that accessories were purchased at the time of vehicle purchase, while 14% said that accessories were purchased anywhere between one and three weeks after vehicle purchase (see Table 4). The most popular place-of-purchase choices by respondents were mail-order catalogs followed by chain auto-parts stores. At the bottom of the list were newspaper classifieds and retail department stores (see Table 5).

When marketing to consumers and enthusiasts, retailers and manufacturers should know what factors a purchaser considers before buying a product. Some people rely on advice from friends, while others look at brand names. Table 6 ranks the factor choices that were included in the survey by importance. An overwhelming majority—87%—believed that quality was very important. Keep in mind that respondents were able to weigh in on each of the decision factors.

Mobile-Electronics Sales

Retail sales of mobile electronics grew nearly 4% between 2007 and 2008, due in large part to increases in two categories: video entertainment and navigation systems, and cellular, iPod, MP3, PDA docks and accessories. In five years, from 2004 to 2009, the mobile-electronics segment of the specialty-equipment market rose 25%. Despite the growth in entertainment and navigation systems, audio and sound products continued to make up the largest portion of the mobile-electronics market (see Chart 1).

SEMA NEWS-DECEMBER 2009-RESEARCH SEMA NEWS-DECEMBER 2009-RESEARCH SEMA NEWS-DECEMBER 2009-RESEARCH
Table 4: Surveyed enthusiasts were asked when accessories were purchased relative to the purchase of the vehicle. Table 5: The most popular place-of-purchase choices by respondents were mail-order catalogs followed by chain auto-parts stores. Table 6: Factor choices were ranked in the survey by importance. An overwhelming majority—87%—believed that quality was very important.
     
A collaborative effort by three companies—NAVTEQ, Nokia and Magneti Marelli—has resulted in an interesting product on the horizon. According to Mobile Electronics magazine, the companies have come together to develop a technology that integrates smartphones into a vehicle’s infotainment system. The connection can be made either via Bluetooth or a USB cable. Innovations such as this will continue to enable consumers to bring the technology they love to use every day right into their vehicles, just as was done with iPod and MP3 connectivity that is becoming more common in today’s vehicles.
  SEMA NEWS-DECEMBER 2009-RESEARCH
 

Chart 1: Despite the growth in entertainment and navigation systems, audio and sound products continued to make up the largest portion of the mobile-electronics market.

It is remarkable how sophisticated vehicles have become. They are made up of complex systems not only in the powertrain area, but in the electronics and inner workings themselves. On one hand, the complexity of such systems could create some challenges for SEMA members. However, those challenges also create numerous possibilities for improving vehicle capability and making cars and trucks even cooler.

With long commutes and active lifestyles, Americans spend a good part of their lives in their vehicles. The ability to listen to favorite music from an iPod through an awesome stereo system while at the same time arriving at a destination without getting lost thanks to a navigation system can mean the difference between simply making a car trip and having a memorable driving experience. For this industry, vehicles are not simply modes of transportation. They are reflections of the enthusiasts who drive them.

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