Work-Arounds
Not long ago if you brought up the subject of removing and replacing a late model factory radio with a car audio technician, he would have responded as if your dog had just soiled his family’s heirloom rug. Why? The process of replacing or enhancing the original mobile information/entertainment systems in consumers’ vehicles increasingly has become more complicated and expensive as a result of physical and electronic barriers implemented by car OEMs.

It is not uncommon now for vehicle functions such as HVAC (heat, vent, air conditioner) adjustment, dome lights, safety chimes and other vehicle functions to be controlled through the factory in-dash screen and engineered into the car’s audio system. As a result, removing the factory radio can affect these systems adversely and create a fiendishly complicated project. What is more, the cost to re-engineer the vehicle could be exorbitant for consumers and, in the worst cases, only can be done at the service department of the vehicle dealership.  

But wait, there’s a happy ending. With OEM integration products now widely available (and discussed further in the next section of this chapter), consumers can add audio, video and navigation components and/or upgrade their sound system with amplifiers, speakers and subwoofers without playing havoc with the car’s other functions or upsetting the vehicle’s electronic network.

Hard data support this upbeat attitude. CEA conducted a survey of mobile installers in 2005 in cooperation with the Mobile Enhancement Retailers Association (MERA). About 1,700 electronics installers completed the Aftermarket CE Vehicle Installation survey, basing their overall ratings on a wide array of CE devices they installed. Specifically, 45 percent of vehicles in this study had an aftermarket audio system installed, 39 percent had a satellite radio installed, 38 percent entailed upgrades to the OEM audio system (speakers, amplifiers, subwoofer, etc.), and 29 percent involved a security system.

Among the key findings of the study are these: Overall, 54 percent of mobile installers said the CE installation they performed was “easy” or “very easy.” Thirty-five percent indicated it was “somewhat easy, somewhat difficult” and one in ten (ten percent) said it was difficult. Eight automakers account for nine out of ten of the vehicles rated by installers in this study. Of these eight, Ford and Toyota vehicles received the best ratings overall; 66 percent of installers who put product into a Ford or Toyota said it was “very easy” or “easy”. DaimlerChrysler came in third with a 60 percent “Ease of Installation” rating, followed by Nissan (59 percent), and Honda (58 percent). Brands with below average ratings are GM (49 percent), VW (24 percent), and BMW (19 percent).

Model years 2000 through 2002 received much easier ratings than those vehicles made between 2003 and 2005, a fact perhaps attributed to the more sophisticated technology found in newer vehicles.

Good Times Ahead
Overall, and despite the lukewarm forecast numbers, there are numerous reasons to be bullish about growth potential of the mobile electronics sector. For instance:

1. In a category that was once known as "car stereo" but now encompasses several forms of entertainment, information and security, the navigation business has taken the industry sector on its back and seems determined to carry it toward prosperity. CEA predicts unit sales of plug-and-go portable and transportable navigation will jump from 707,000 in 2005 to 858,000 this year with sales in dollars moving ahead from $403 million to $424 million. Various in-dash navigation units now offer audio and video playback, digital recording, integrated satellite and HD radio functions as well as compatibility with other electronic devices through memory cards. Navigation devices also add real-time traffic and weather information, language translation, MP3 and audio-book play capabilities as well as Bluetooth wireless connections to mobile phones or computers, and much more.

2. Mass media continues to focus on the style and glamour of automotive aftermarket goodies. Whether the consumer is looking for a full-blown, competition-winning system or just wants to upgrade the sound in his or her daily commuter car, the tricked out Porsches, Hummers and Ferraris featured on popular TV shows like Pimp My Ride and Unique Whips are creating a new generation of “gotta have it” buyers for custom installers.

3. Consumers now can integrate their personal mobile devices easily into the car. Everywhere you look, in-dash receivers are connecting to all of today's popular media formats, including iPod, XM or Sirius satellite radio, HD Radio and USB-based MP3 players. High-speed cable connectors are available to connect and control an iPod from the car’s sound system, and full iTunes library information can be displayed via the headunit. Some receivers will handle both XM and Sirius to give consumers a choice of satellite radio services. And motorists can connect memory cards and USB flash drives to play their own digital music through their car’s audio system.

4. Wireless communication with external sources is starting to take hold. The first beneficiary is Bluetooth, providing simple, hands-free mobile phone connection in the car via Bluetooth-enabled headunits. Looking forward to the day when everyone on the road will have e-mail and Internet access? 2006 marks the debut of the first vehicle-based satellite system providing in-motion, high-speed, two-way Internet access. Development work also is progressing toward vehicular systems eventually encompassing wireless Wimax, WiFi and/or ultra wide band (UWB) access as well as vehicle-to-vehicle communication. 

5. The tenuous financial position of several of the country’s big auto OEM component suppliers – resulting from their reliance on the Big Three auto companies for generating revenue – should create opportunities for aftermarket supplier growth for the next five years and beyond.