As Cars Increase Their Reliance on Electronics, the Market is Poised to Grow
››› North Hall at last year's SEMA Show was ground zero for mobile-electronics exhibitors, with companies that manufacture information, entertainment and onboard safety systems all represented.
It's often said that today's cars are, effectively, computers that come equipped with four wheels. And there's certainly some truth to that, as onboard electronic safety and driver-assistance systems proliferate and as cars edge ever closer to full autonomous operation. Mercedes-Benz made news earlier in the year with the announcement that it had produced the first SAE Level 3 autonomous driving system that was capable of state certification. The state of Nevada has already okayed the use of the Mercedes-Benz system on its roads, California may soon follow suit, and it is only a matter of time before other OE manufacturers roll out vehicles with similar state-certified AI drive systems in place.
In any event, the mobile-electronics market continues to diversify and grow as consumers demand more onboard content for their purchasing dollars and as automobiles continue to grow more technologically complex in response. Electronic componentry already accounted for some 35% of a new vehicle's cost in 2020, and that number is forecast to reach close to 50% by 2030, according to a recent survey published by Grandview Research.
For this article, we consulted more than a dozen industry experts. Here are their insights, edited for clarity and length.
The State of The Industry
The mobile-electronics industry took a hit during the first year of the COVID-19 pandemic, with a 5% decline in sales worldwide in 2020, according to Fortune Business Insights, as supply-chain disruptions and a steep decline in new-vehicle sales both inhibited market activation. Since then, the industry has rebounded despite continued sluggish new-car sales, with a global market valuation of $295 billion in 2022 and a forecast to reach $415 billion by 2028, with a compound annual growth rate (CAGR) of around 7%, according to a 2022 survey published by Statista.
"We are coming out of a time where initial uncertainty yielded unforeseen opportunity," said Zach Luke, national sales manager for Rockford Fosgate. "The market flourished, and companies that were able to adapt and pivot found success, growth, and a resurgence of consumer interest. Consumers' spending options were narrowed, which focused them to engage and prioritize discretionary spending to categories that were maybe once not a priority on the 'wants' list but which had now become in demand as an edifying option."
"The market is, I think, kind of flat," said Jeff Varick, founder and director of business development and connected vehicle services for BrandMotion Solutions, adding that the market appears to be fragmenting into more granular niche segments. "You really have to know your customer and the particular use cases that customer has."
››› Onboard safety systems are set to proliferate as ADAS, LIDAR and other driver-assistance technologies become more universal. This FullVue mirror from BrandMotion gives truck owners three distinct rear views for monitoring the truck's bed or a towed load. Courtesy Brandmotion
Emerging Trends AND Technologies
The pandemic-related surge in off-road motorized recreation, including overlanding, impacted the mobile-electronics sector as well. "The absolutely insane growth in the off-road space during the pandemic was surprising to us," said Brian Sherman, vice president of product and marketing at Maxxsonics USA. "We exceeded forecast in aftermarket and OEM sales during this period by double digits. This has allowed us to hire additional engineering and support staff to fuel future growth and develop new applications more aggressively."
"It's an advantageous time to be in the aftermarket performance business," added Zach Luke.
Consumer demand for more advanced safety systems—which already constitutes some 30% of the automotive mobile-
electronics market—continues to drive new product innovation. "On the powersports and off-road side of our business, we're seeing more advanced technologies used," Sherman noted. "We recently completed a dual camera setup for one OEM customer and have added multi-camera inputs to most of our marine and powersports source units."
The need for onboard safety has never been greater. Auto-related fatalities rose again in 2022 to an estimated 46,000 deaths, according to the National Safety Council—a 22% increase since 2019, even though total vehicle miles traveled in 2022 were still below pre-pandemic levels.
"We have big problems on our nation's roads, a big national public health problem," Varick said. "A lot of it's due to speeding, drugs or drinking, and then cell-phone distraction. So solutions for those things are where I see the most activity right now in the safety end of the mobile-electronics market."
Meanwhile navigation systems and mobile TV and video cameras for automotive applications currently constitute a North American market size of nearly $1 billion, according to recent "SEMA Market Report."
Sales of premium audio systems have also shown signs of growth. "We have seen an uptick in sales of higher-priced, higher-end car audio amps and speakers in our Hifonics and MB Quart brands," said Sherman.
Consumer demand for higher-end audio has forced companies to continue to innovate. "Our continual development of upgraded in-car solutions keeps us on the cutting edge of technology as consumer expectations of performance, reliability, overall integration, and fit-and-finish are high," said Luke. "This allows us to 'push' our propriety technologies into the platforms where we're seeing our customers engage."
Looking at future trends, Varick sees electrification as the most likely new growth market. "I'm bullish on fleet and EVs, which are coming faster than shared mobility and faster than V2X. Electric vehicles aren't that different—it's just a different powertrain—so it creates another segment of the market to look at for opportunities."
Challenges and Opportunities
Economic headwinds can also present opportunities in secondary markets. "Rising interest rates and manufacturing costs will force OEMs to be more frugal with development and sourcing," Sherman said, adding that "this can provide more opportunities for upgrades from the aftermarket."
"Today we find ourselves in a position where we need to elevate our business strategies and offerings, both where B2B and B2C are involved, with better service, support and product," said Luke. "We're once again competing with an expanded list of items and events that consumers can spend their money on."
Varick doesn't see any "one-size-fits-all-solutions anymore, like a backup camera. I think you really have to come up with custom solutions and niche applications."
››› Higher-end niche applications have gained market share in the mobile space. This all-in-one Rockford Fosgate ST audio system for the Harley-Davidson Low Rider series provides an example of the type. Courtesy Rockford Fosgate
As an example, Varick explains, "We have a pretty successful digital rear-view mirror that gives you a full video screen on the mirror. You push a button, and it goes back to being a regular mirror. But when it's a video screen, it's seeing behind you. Even if you have people in the back seat, it's just a camera pointing backward. So we just added a version of that that has a wireless trailer camera for RVs or for a trailer that you're towing, and a custom third brake-light bezel that watches the bed of your pickup."
Our sources emphasized the need for a robust presence across numerous social-media channels to optimize marketing.
"Most of our brands' ad dollars go to social now as it's the most targeted way to reach consumers," said Sherman. "Niche products require niche marketing, and this provides a clean way for us to market direct to the consumer and drive business to our retail and distribution partners."
Sherman echoed the sentiments of our panel with his near-term forecast. "We feel that business will be up in all segments, but not without challenges."
"Our objective is to continue creating demand by delivering industry-leading product and service," said Luke, "which enables us to continue capturing consumers open to buy."
The market is more fragmented now," Varick concludes, "so you need to find a market that isn't getting served by the OEMs or the general aftermarket."
MOBILE ELECTRONICS & TECHNOLOGY
As of August 15, 2023
AAMP Global 10409, 10417
American Bass 10223
Aotop Tech Co. Ltd. 10218
Autoequips Tech Co. Ltd. 10129
Battery Tender 10229
Bazooka Audio 10317
Cability Inc. 11022
Car Mate USA/RAZO 10913
Cedar Electronics 11239
Cerwin-Vega/Diamond Audio 10148
Crux Interfacing Solutions 11116
Daehong Technew Co. Ltd. 10313
DAS Companies Inc. 10731
DB DRIVE CAR AUDIO 10323
Dr Power Systems 11224
DS18 Car Audio 10847
E-Auto Co. Ltd. 10451
EV & Future Propulsion 24401
EVERISE INDUSTRIES SZ Ltd. 11216
FairInteramerican Inc. 10939
The Fesco Group 10009
Firstech LLC 10339
ForTek Electronics Co. Ltd. 11127
Fuho Technology Co. Ltd. 11016
Gentex Corp. 10338
Global Media Industry Group Co. Ltd. 11039
Grandnavi Technology Co. Ltd. 11347
Guangzhou DM Electronic Technology. Ltd. 10416
Guangzhou Forten Car Accessories Co. Ltd. 11225
Guangzhou Huge Circle Electronic Technology Co. Ltd. 11025
Guangzhou Leeed Keakky Electronic Co. Ltd. 11226
GU Auto Tech Inc. 10418
Hangzhou Fransonic Technology Co. Ltd. 11123
Harman International 10217
Hertz Audio 10017
HKI USA 10439
Horizon Brands 11053
Hornblasters Inc. 10408
Jackery Inc. 10955
Jingdezhen Jinchen Electronics Industry Co. Ltd. 10316
Key Technology 11024
KING BOXES 10113
KISAE Technology 10222
LandAirSea Systems 11149
LinksWell Automotive Inc. 10209
Massive Audio 10142
Master Tailgaters 10550
MCY Technology Ltd. 11021
Memphis Audio 10839
Metra Electronics 10539
MITO Corp. 10909
Mobile Solutions LLC 10631
mObridge Audio 11228
Moorechip Technologies Co. Ltd. 10855
Mouse Blocker 11012
Nakamichi Car Audio 10109
Orient Development Enterprises Ltd. 11220
Pioneer Electronics (USA) Inc. 11417
POWERBASS USA Inc. 10352
Powerus Amplifiers 10315
Promata Automotive 11222
PRV Audio 10429
REDTAIL Telematics 11117
Rockford Fosgate 10709
ScanGauge-Linear Logic 10923
Scosche Industries Inc. 11009
ScyTek Electronics Inc. 11042
Shenzhen Betoptek Electronics Co. Ltd. 10414
Shenzhen Fenergy Technology Co. Ltd. 11531
Shenzhen Gofuture Technology Co. Ltd. 11129
ShenZhen Ottocast Technology Co. Ltd. 10224
Shenzhen Proinno Technology Co. Ltd. 11125
Shenzhen Wins Novelty Co. Ltd. 10412
Shenzhen Wonda Tech Co. Ltd. 11242
Sirius Light Technology Co. Ltd. 11120
Sondpex Electronics 10929
Sony Car Audio 10521
SoundExtreme by ECOXGEAR 10353
STONKAM Co. Ltd 10309
Texas Boombox 10410
Topo Tech Co. Ltd. 11121
Ultronix Products Ltd. 11017
United Safety Front Brake Light 11343
VAIS Technology 10228
Vision Automobile Electronic Industrial Co. Ltd. 11047
VOXX International Corp. 10509
VUGERA DASH CAM 11146
Wenchi & Brothers Co. Ltd. 11131
Wet Sounds Inc. 10551
Xiamen Autostar Electronics Co. Ltd. 10919
XKGlow Inc. 10455
Zhejiang Haosheng Electronic Technology Co. Ltd. 11133
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