The growth of the in-car entertainment industry is driven by the estimated 3 percent to 5 percent market growth rate in global car output, which is currently at 60 million units.
Industry analysts observe that increased market demand for cars with combined DVD player and navigation functions would be one of the main drivers for suppliers' export growth.
The manufacture of in-car entertainment products has been moving to China, including the mainland and Taiwan, to the extent that about 80 percent of international manufacturers such as Sony, Kenwood, Pioneer, Alpine, JVC and Matsushita, have established production facilities there.
This report covers 23 companies from mainland China, five from Taiwan and four from South Korea. Analyses of data are based on this respondent universe.
Manufacturing Capability
• Guangdong province in mainland China is the main production hub, hosting 70 percent of suppliers in this report.
• The industry is relatively young across regions. The majority of the makers joined the line in the last five years.
• Monthly outputs vary widely — from 3,000 units to more than 200,000 units. A majority of the makers on the mainland, however, are considered medium-scale manufacturers.
• Sixty-five percent of makers operate at near capacity while 35 percent produce at half capacity.
• Most interviewed companies have invested an average of US$7 million each for manufacturing machines and testing equipment. In 2005, respondents spent a total of more than US$7 million for additional equipment.
Exports
• Eighty-three percent of makers attribute half of their total annual sales in 2004 to exports. Considering in-car entertainment products alone, three-fourths of the makers said exports of these products accounted for more than 50 percent of sales.
• Europe and North America are the leading destinations for mainland China, Taiwan and South Korea respondents, with 38.8 percent and 31.2 percent share of product exports, respectively.
• On average, OEM business accounts for 46.9 percent of in-car entertainment product sales. The rest is divided between ODM business, at 28.4 percent and own-brand sales, at 24.7 percent.
Product Trends
• Just as it was forecast about two years ago, in-car entertainment products are evolving into multifunction units, integrating security and navigation functions into DVD-based units. However, makers still offer single-function devices such as monitors/TVs, CD/VCD players and DVD players.
• Value additions to existing models include improved output power, resolution, user interface and cosmetic design.
• With the adoption of digital video broadcasting, especially in Europe, makers have introduced in-car TVs with digital TV tuners. The DVB-T models dominate but DVB-H and DMB-T units are also available.
Industry Overview
The in-car entertainment industry has a huge growth potential, if only for the reason that the car manufacturing industry is not relenting in its pace. According to Taiwan research institute ITIS, the industry value of global car electronics in 2004 was around US$122.5 billion and is estimated to reach US$135 billion in 2005. By 2008, the market will have expanded to US$163.5 billion.
Industry analysts and research groups project that the market for entertainment systems in light vehicles will grow by 6.3 percent annually until 2008. The car entertainment industry in North America alone is estimated to be worth US$7 billion.
Demand and sales of older in-car entertainment products such as AM/FM/cassette/CD players will decline to give way to new technology devices like multimedia DVD players, satellite radios, MP3/WMA players and hard disk drive multimedia systems.
Mainland China's Supplier Base Doubles in One Year
In the first nine months of 2005 alone, mainland China already produced 2.1 million cars and 1.4 million trucks, with a year-on-year growth of 17.7 percent and 3.3 percent, respectively.
Encouraged by the solid growth in the automotive industry, as well as the lower technological requirement than before, more mainland China maker shave rushed into in-car entertainment industries.
In-car A/V electronics is one of the most dynamic industries in Asia, particularly in mainland China. Based on Global Sources research, car CD players, car DVD players and in-car TVs generated around US$800 million in exports in 2003. Export growth in 2004 was between 40 percent and 60percent, while domestic sales ran at around 12 percent to 15 percent.
When Global Sources conducted research for the sourcing report 'In-car Entertainment: Supplier capability in China,' which was published in March 2004, there were around 250 in-car entertainment device makers in mainland China. Their major products included car speakers, car amplifiers, car CD/cassette players, car VCD/DVD players and in-car TVs/monitors.
Surveys conducted for this update report showed that the number of suppliers based in the region has doubled to 500 since 2004. The product roster has also become more sophisticated, bordering on the high end. Most new suppliers are focusing on video products such as in-car TVs/monitors and car DVD players with LCD panels. Companies are now also capable of releasing more sophisticated products like in-car GPS navigators and DVB-T in-car TVs. By 2006, buyers can expect in-car PCs to be released in the market.
Lured by the line's rapidly developing markets and higher profit margins, big name players in the home A/V industry started entering the sector in recent years. Among them are TCL, Skyworth and Konka, which all released their in-car TVs/monitors and car DVD players in 2004. Shinco and SVA unveiled in-car GPS navigators, while Changhong launched its in-car TVs/monitors in 2005.
Just like in other consumer electronics industries, the low cost of land and labor, the preferential tax policy and the huge market potential in mainland China attracted many industry giants—especially Japan-based companies—to set up factories in the region.
Today, internationally-recognized brands such as Alpine, Clarion, Kenwood, Panasonic and Pioneer of Japan; Siemens VDO of Germany; Philips of Netherlands; and Hyundai of South Korea maintain production facilities in mainland China.
The after-sale and DIY markets are still the major markets for most mainland makers, especially abroad, and more than 90 percent of mainland exports are labeled with buyers' brands.
Clients mentioned by respondents include specialist A/V brands such as Hitachi, Siemens VDO, Sanyo, JV and Grundig, as well as retailers such as Wal-Mart.
Mainland makers provide OEM/ODM services for car makers. Oritron, for example, has provided car CD players to Ford and Shanghai Volkswagen; and Guoguang has shipped its car speakers to GM and Nissan.
Supplier Profile
Access Microsystems Corp.
Access Microsystems Corp. (AMC) is a Taiwan manufacturer of car TFT-LCD monitors. Founded in 1992, the company started as a supplier of electronic door remote controllers. It entered the car entertainment industry in1997. Its products include LCD monitors, LCD modules, rear-view systems and other A/V accessories.
AMC has its headquarters in Taipei Hsien, Taiwan. It has 25 employees. The company recorded a total annual sales of US$2 million in 2004, US$1.96 million of which came from the sales of car monitors. For 2005, the company's estimate for its total annual sales remains at US$2 million.
AMC is an export-oriented company. Ninety-nine percent of its annual sales value is attributed to the company's overseas markets. In 2004, the company's export sales value was US$1.98 million.
North America is AMC's main export market, accounting for 90 percent of the company's export sales. Other export markets are Europe, specifically Germany and the United Kingdom, which accounts for 9 percent of the company's export sales; and Asia, which accounts for the remaining 1 percent of the company's exports.
Most of AMC's products are shipped through the port of Keelung. The company attends trade shows such as Taitronics in order to meet and interact with current and potential clients.
OEM orders represent 99 percent of AMC's business. Sales from its AMC brand contribute 1 percent to the company's overall sales.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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