Executive Summary

In 1994, the in-car entertainment market was worth an estimated £471m, accounting for a 9.4% share of total consumer spending on audio-visual products. Value sales in 1994 were 5.1% up on the 1993 total, while volume sales increased by 6.4% over the same period.

The main products included in the market, are combined radio cassette players, radios, cassette players, compact disc (CD) players and loudspeakers and amplifiers sold separately. Combined radio cassette players dominate sales, and accounted for 70% of the value of the market in 1994. CD player sales are growing, but they still only accounted for 10% of all value sales in 1994. Loudspeakers accounted for 17% of value sales, and 51% of volume sales in 1994.

The market segments into two sectors: the original equipment market, where audio equipment is fitted to new cars usually on the production line, and the aftermarket, where consumers upgrade or replace their systems by purchasing equipment through various retail channels. By the mid-1990s, an estimated 93% of all new cars were fitted with some form of in-car audio system, and the original equipment market accounted for 50.7% of the overall market in value terms, and 55.9% in volume terms in 1994. However, the aftermarket has shown the strongest growth in recent years with new technical developments, such as CD players, and new digital formats such as digital compact cassettes (DCCs) and mini discs (MDs), being targeted at this market.

Sales in the original equipment sector are inevitably linked to new car sales. New car registrations fell in 1990 and 1991, with obvious repercussions for the original equipment market, but new car sales recovered significantly in 1993 and 1994, and the original equipment market is growing again.

The number of companies supplying the in-car entertainment sector has grown over the last decade. Many of the leading names in the industry are Japanese-based companies with marketing and distribution subsidiaries in the UK, and these include Pioneer, market leader in the in-car entertainment aftermarket, Sony, Panasonic, Clarion and Alpine. The major competitors to the Japanese companies include Philips, Goodmans, Bosch, and Audioline. The car manufacturer Ford is also a leading supplier.

Year-on-year increases in new car registrations over the next few years, coupled with further product developments and increased disposable income, should provide the basis for healthy growth in the market up to 1998 at least. In 1995, Key Note expects the market to reach £495m, while by 1999, it is forecast to reach £566m, a 20.2% increase on the 1994 value.

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