Local Audio Firms Vs. Detroit : Battle Over Dashboards Sends Up Bad Vibrations
It may not rank with “give me liberty or give me death,” but “dashboard democracy” is a serious rallying cry for a band of firms that are fighting for shares of the car radio market.
Companies that make radios and other audio equipment sold directly to car owners are complaining that auto makers are squeezing them out of the $2.8-billion annual market by installing more sound systems at the factory.
The companies, including several in the San Fernando Valley, claim Detroit is increasing profit margins by loading cars with overpriced, low-quality stereos that get buried in the base price or in long-term financing packages.
“You have to push, dig and claw to get a stripped car,” said Walter Dartland, consumer advocate for Dade County, Fla., who has taken up the car stereo companies’ cause. Auto makers, he said “will hook you for everything.”
Indeed, the makers of car audio systems yearn for the old days when many cars were sold “stripped,” without radios and other options. In 1978, 16.8% of all American-made cars came without radios. Even two years later, 68% of foreign models were sold without radios, making them prime targets for car audio companies.
But the trend is reflected clearly in the latest sales figures. Among domestic 1985 models made through March 31, only 6.6% came without radios. Among imports, the drop was more dramatic. Of 1985 models sold through June 30, 31.6% came without radios, down from 68% in 1980.
Car makers say they include stereo equipment--very few autos now have only AM radios--because customers want it, but without the hassle of installing their own. They say the factory systems are worth the price, usually in the $250 to $350 range, and are tested to make sure that they are compatible with the auto models in which they are installed.
The trend obviously makes life difficult for the companies that make the fancier systems--with price tags of up to thousands of dollars and often including multiple components, such as separate amplifiers--sold in electronics stores.
Focus on Older Cars
The car stereo companies find themselves forced to concentrate sales efforts on owners of older cars or those who have had their radios stolen. Without giving up on the new-car market, however, they also are campaigning for “dashboard democracy,” the right of customers to buy new cars without radios.
In addition, three Valley companies that make car audio equipment are taking other steps to survive, including making profitable friendships with the enemy:
- Northridge-based JBL has agreed to supply Ford with amplifiers and speakers.
- Infinity, in Chatsworth, is selling amplifiers and speakers to Chrysler.
- Tarzana-based Concord Systems, which also makes complete car stereo units, is looking to diversify into radar detectors.
JBL and Infinity have been making home stereos for years. JBL jumped on the car stereo bandwagon in 1979, and Infinity introduced its auto speakers nearly three years ago. Concord, a former home tape-deck maker, shifted exclusively into car stereo components in 1977.
A few years ago, the car stereo business was booming. According to the Electronic Industries Assn., a trade group, factory-installed and after-market sales were $2 billion in 1981, up 46% from 1980.
Other Competition
But home computers and videocassette recorders began claiming much of the money that consumers spent on high-tech toys, and the auto makers began taking increasing shares of the sales themselves, car stereo executives say.
U.S. auto makers manufacture most of the stereos that they install in their cars. Among imports, it’s a mixed bag. Nissan makes its own stereos, Toyota uses equipment from Panasonic and Fujitsu, and Becker equipment is installed in Mercedes-Benz cars in Stuttgart, West Germany.
Most car makers offer a “radio-delete” option in exchange for a lower sticker price. “It’s not the sort of thing we’d offer on a battery or on brakes,” said Ed Lechtzin, a Chevrolet spokesman in Warren, Mich. “But stereos are different.”
The complaint of car stereo makers is that the majority of consumers don’t know about the option.
Lobbying Arm
To fight that, seven years ago the car stereo industry founded a lobbying arm in Washington, the Car Audio Specialists Assn., which pushes for federal and state laws that benefit its members.
The association has gotten only one bill introduced so far, in Florida, which would have made the radio-delete option mandatory for all cars sold in that state. According to Dartland, the consumer advocate, the bill was proposed late in the session and never reached a vote.
“We didn’t have a chance,” he said.
The association’s greatest success came six years ago. The organization dropped a lawsuit against General Motors when the car company agreed to offer the radio-delete option through 1983. GM still offers it voluntarily, as do some other auto makers.
Need for Awareness
James S. Twerdahl, president of JBL and a member of the CASA board of directors, said making auto buyers aware of the radio-delete option is essential to keeping the after-market competitive. “If they know they have a choice, if they compare prices freely, we’ll win,” he said.
But Twerdahl has a backup plan. The agreement with Ford, completed in June, was only the second deal between an after-market manufacturer and a car maker. The first was reached in 1982 between GM and Bose Corp. of Framingham, Mass.
The Ford JBL audio system--called a “formidable force in the auto-sound industry” by High Fidelity magazine--features four 35-watt-per-channel amplifiers, a tuner, tape deck and four speakers. It is a $389 option on the Lincoln Town Car.
The systems, made especially for Ford, are only available on Lincolns--which make up 7.6% of Ford sales in the United States. Twerdahl said that stereos are being planned for other Ford models, but that exposure in car showrooms in the meantime could be a boon to the company.
“The guy who loves the Ford JBL system, but would rather drive a sporty car than a Continental, can buy JBL in an after-market store,” he said.
Upper-End Position
JBL, a subsidiary of Northridge-based Harman International Industries, is positioned at the upper end of the car stereo business with its speakers retailing for between $100 and $250 a pair. The company employs 550 at its Northridge plant, where it makes its home and car speakers.
Infinity, another Harman subsidiary with annual sales over $30 million, gained its reputation from home speakers that sell for as little as $100 to as much as $35,000--the latter price for a four-piece system of 7 1/2-foot tall speakers made of Brazilian rosewood.
The 17-year-old company also makes a car amplifier that sells for $200 and an extensive line of car speakers. Infinity speakers will be offered as options in 1987 Chrysler models beginning in August, 1986.
But Arnold Nudell, president and founder of Infinity, said he doesn’t expect the Chrysler pact to account for more than 10% of the company’s car speaker sales in the deal’s first year. Like Twerdahl, Nudell said he is mainly interested in introducing the Infinity name to car buyers.
Uses Subcontractors
Most Infinity products are made by subcontractors in the Far East, Europe and the United States. About 100 employees in Chatsworth mostly handle quality control and distribution, but a handful of them make the top-of-the-line home speakers by hand.
Concord, with annual revenue of nearly $20 million, manufactures all of its equipment through a wholly-owned subsidiary in Japan. Its dashboard AM/FM cassette stereo units retail for $150 to $650.
Concord President Thomas J. McLoughlin said that, in addition to worrying about consumer ignorance of the radio-delete option, he is concerned that cars are being made with dashboards that only allow for original equipment.
For example, he said, the 1986 Buick Riviera has a “control center” that also operates the air-conditioner and heater.
Wants to Diversify
McLoughlin said he wants to diversify Concord, but is not sure which route to take.
The home stereo market is saturated, he said, as is the car alarm business. McLoughlin said he is considering making radar detectors because Concord could find a niche in expensive compact units.
In the meantime, McLoughlin said, the high end of the car stereo market holds the greatest growth potential as long as business is coming from people tired of their standard factory radios. “People aren’t going to rip out a perfectly good stereo to replace it with junk,” he said.
