Strategic Analysis of the European OE Market for Car Audio Systems

Research Overview

This Frost & Sullivan research service titled Strategic Analysis of the European OE Market for Car Audio Systems provides an opportunity analysis of different types of audio systems. It includes an analysis of upcoming technologies such as DAB, satellite radio and Bluetooth, among others. This study also offers a detailed competitive landscape analysis.

Technologies

The following technologies are covered in this research:

• Digital Audio Broadcasting (DAB)
• Satellite Radio
• Bluetooth A2DP
• Bluetooth AVRCP
• Hard Disk Drive (HDD)
• Digital Tuners
• Phase Diversity
• Connectivity to Nomadic Devices

Market Overview

Advent of Digital Media into the Vehicle to Promote Demand for Car Audio Systems

While the original equipment (OE) audio systems market in Europe is perceived to be in a phase of saturation, there are significant growth opportunities for vehicle manufacturers (VMs) in an otherwise mature market. Several original equipment manufacturers (OEMs) have demonstrated interest in upcoming technologies such as the Bluetooth A2DP (audio distribution profile), in addition to offering digital audio broadcasting (DAB) in markets like the United Kingdom and Germany. Satellite radio, hard disk drive (HDD) and connectivity to nomadic devices are other technology areas that offer significant growth potential.

"Consumers increasingly want the playback of MP3 and compressed music files in the car," notes the analyst of this research service. "This is the key factor driving VMs and suppliers to offer audio systems with MP3 playback capabilities. Apart from original music CDs, MP3 is also obtained from several other sources. Moreover, varied compressed digital media are available such as Windows Media audio files (WMA) and the playback of these file formats in vehicles is assuming greater significance." Portable music players such as the Apple iPod, have created a revolution in the homes of Europe and the United States. The memory storage capacities of the iPod range from 512 MB to 60 GB, and offer consumers the convenience of storing large volumes of music without the need to rely on CDs. Clearly, the evolution of the digital media is increasing demand for car audio systems and OEMs can benefit from such growth opportunities by offering USB or wired connectivity to such devices.

Improved Product Portfolio Crucial for Market Growth

Despite the growth potential of market, the lifecycle mismatch between the vehicle and the consumer electronics industry is a highly relevant issue. New developments are occurring at a very rapid pace in this market. A typical example is the launch of Bluetooth A2DP (audio distribution profile) for audio streaming from personal devices to the vehicle. This is a clear challenge for automakers and is also increasingly important in view of the competition from low-cost aftermarket systems. "While the typical time taken for the construction of a vehicle is 3-5 years, the average lifetime of any consumer electronics standard is only about 1.5 years," remarks the analyst. "This makes it difficult for vehicle manufacturers and their associated Tier 1 suppliers to stay abreast of the changes and upgrade the vehicle to the latest technologies"

Vehicle manufacturers and their associated Tier 1 suppliers will need to increase their product portfolio for audio systems. In addition to offering different audio solutions such as the single CD, MP3 and high-end DVD players, they will need to provide a wide variety of each of the above. Striking the right balance between cost and system features suited to a particular vehicle segment is crucial. This can negate the competition from low-cost aftermarket systems.