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New From Freedonia Group: Automotive Entertainment Systems

Demand in North America to Reach $9.5 Billion in 2008

Freedonia Automotive Analyst, Lance Ealey, forecasts an annual growth rate of 6.3 percent for the North American market for light vehicle entertainment systems in the original equipment manufacturer and aftermarket industries, reaching $9.5 billion in 2008. Propelled by the introduction of innovative new technologies, demand for entertainment system hardware is expected to maintain comparatively healthy growth profiles at both the OEM and aftermarket levels.

The largest product category has been conventional audio systems (e.g., AM/FM/cassette/CD systems), but these are being challenged on multiple fronts. Sales of conventional audio systems will decline rapidly as new technology bundles are introduced (typically including conventional system elements such as CD players and AM/FM radios).

Among the new technologies expected to take increasing shares of the entertainment system market in North America are satellite radio systems, hard disk drive multimedia systems, multimedia DVD players and audio systems equipped with data compression technologies. Satellite radio systems have recently entered the mainstream at both the OEM and aftermarket levels. They have in particular generated significant interest at the OEM level, thus ensuring an increasing number of new light vehicles which feature integrated satellite radio capability.

Strong growth is expected in a variety of new or nearly new products, such as satellite radio, MP3/WMA-equipped systems and hard disk drive (HDD) equipped systems. Conventional audio systems will continue to lose share in both the OEM and aftermarket markets. However, many of the features used in these systems -- e.g., CD players, AM/FM -- will obviously be included in the newer systems.

The United States, Canada and Mexico make up the North American region and collectively accounted for almost $7.0 billion in automotive entertainment system sales in 2003. The OEM portion of the entertainment market represented over 60 percent of the total, with aftermarket sales making up the rest. The United States has by far the largest market share of the total North American entertainment market, accounting for 81 percent of the total in 2003. Mexico has the smallest but fastest growing market share, currently at about seven percent, while Canada accounts for the remaining twelve percent. All three markets remain significant growth engines, due to the continued arrays of innovative products the industry is introducing.

Distributed by Market Wire