Automotive Rear-Seat Entertainment Aftermarket Poised for Tremendous Growth, Reports Frost & Sullivan.

Business Editors & Automotive Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--Dec. 18, 2000

Driven by economic prosperity, changing lifestyles, longer drive times and the need to keep kids amused, the automotive rear-seat entertainment aftermarket continues to experience phenomenal growth.

However, this market is closely linked to price; focusing on the ability to supply a low-cost system, which will ultimately determine this industry's future.

New strategic research from Frost & Sullivan (www.frost.com) reveals that the "North American Automotive Rear-Seat Entertainment Aftermarket" generated revenues of nearly $208 million in 2000. Frost & Sullivan projects this figure to more than double by 2007, topping $480 million.

"With declining price points, the rear-seat entertainment market, like the consumer electronics market, is set to become a mass market," says Frost & Sullivan Industry Analyst Meenakshi Ganjoo. "Through 2000, the market has already reached the magical retail price point of $399 for the low-end systems, which in turn, is expected to drive volume significantly."

New technologies, however, will have to come down in price if this industry is expected to reach its full potential. Video-based systems are relatively cheap, but the digital versatile disc (DVD) format is where the future lies. These systems have a long way to go before they are considered affordable.

"The market has been helped by the exponential growth of home theaters and DVDs," says Ganjoo. "But prices of in-vehicle entertainment systems remain high because these systems are built to function in harsh vehicle environments. DVD-based systems have a long way to go before they touch the so-called 'magic price' of about $300-350. While prices of home theater systems have dipped, a lack of economies of scale in the rear-seat entertainment aftermarket is making it difficult to push costs down."

In order to push prices down, manufacturers need to expand their targeted customer base to increase demand for these products. They need to devise new strategies for marketing and distribution to raise awareness among potential customers.

"Traditionally, the industry as a whole has focused on younger males between the ages of 16 and 25," says Ganjoo. "As a result, the distribution channels, in particular, are not yet accustomed or geared to serving the expanded customer base."

"One of the challenges of the business is to expand the customer base. With the expansion of products that combine information with entertainment, there needs to be an industry effort to widen the target audience to include women, baby-boomers with kids and professionals who pursue information and productivity."

Frost & Sullivan presents the 2000 Marketing Engineering Awards to companies that have worked hard to make a positive contribution to the North American automotive rear-seat entertainment aftermarket. The Business Development Strategy Award is presented to Rosen Products LLC. The Distribution Strategy Award is given to Clarion Corporation of America. The Product Line Strategy Award goes to Audiovox Corporation [Nasdaq:VOXX] and the Technology Leadership Award is presented to Alpine Electronics  of America [OTC:AELEF].

Companies that participated within this industry include: ASC Incorporated, Accele Electronics Inc., Alpine Electronics Of America, Audiovox Corporation, Aura Systems Inc., Clarion Corp Of America, Delphi Delco Electronic Systems, Kenwood USA Corporation, Magnadyne Corporation, Memtek Products Inc., Panasonic Automotive Electronics Co., Pioneer Electronics (USA) Inc., Recoton Mobile Electronics, Rosen Products LLC, Texas Saddlebags Inc., Steel Horse Automotive, Visteon Automotive Systems, TMI Products Inc.

Frost & Sullivan, which is headquartered in San Jose, Calif., is a global leader in international strategic market consulting and training. Frost & Sullivan's industry experts monitor the ground transportation industry for market trends, market measurements and strategies. This ongoing research is used to complement the Automotive Aftermarket Custom Subscription, which includes studies on the North American Convertible Top, Sunroof, Seat Cover, and Floor Mat Aftermarket and the North American Automotive Radiator Aftermarket. Executive summaries and interviews are available to the press.

Along with publishing in-depth strategic market consulting research, Frost & Sullivan also provides custom consulting needs to a variety of national and international companies.

"North American Automotive Rear-Seat Entertainment Aftermarket"

Report: 7784-18 Date: January 2001