Friday, December 5, 2008

How Auto Industry Troubles Could Affect CE

Research firm iSuppli Corp. reports that sales of vehicles in the U.S. will drop by 17.7% this year compared to last, making it the worst year for the industry since 1980. We all know of the troubles plaguing Canadian auto companies. But how might this affect the consumer electronics industry? Greatly, is the answer. But it could go both ways.

While people aren't slotting tricked out audio systems into their cars as often as they used to, there's a multitude of technology that has been built around the auto industry: satellite radio receivers, iPod FM transmitters and car docks, portable navigation devices, Bluetooth speakerphones...the list goes on. While it's the iPod itself that is central to gadgets like the FM transmitter, it's the small, accessory purchases that garner the most profit for the retailer. As fewer and fewer cars are being sold, people will be buying fewer and fewer accessories for them. So it isn't just the car guys that will suffer.

But...on the flip side, if people are stuck driving around in their old vehicles, things could effectively work the opposite way. Many of the latest model cars (not even just the high end ones) come with things like built-in access to satellite radio (and free, 3-month subscriptions!), built-in GPS navigation, and pretty darned good audio systems. Needless to say, if your car is 10 years old, it won't have any of those niceties. Granted, manufacturers have to provide these OEM products to the car makers. But anything built in certainly does cut into profits from the portable accessory side.

Also consider that even if people are buying new cars during these trying times, they'll likely scale down to more affordable models; the kinds that don't come with all the frilly add-ons. Again, this bodes well for the aftermarket accessory makers.

I'm not trying to say, however, that built-in gadgetry is bad; nor that falling auto sales is good. But maintaining a healthy balance between built-in technology and third-party accessories is a good thing for the technology industry. We all want the auto industry to rise above the current situation. Until then, enjoy the vehicle you have, and make the best of the technology that you can use around it.

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