CD to AV Audio Conversion a Significant Market Opportunity

The biggest short-term growth area in the car audio aftermarket will come from the evolution of audio media systems, from CD to AV, says Matsuro Mano, President and Director General of Pioneer Electronics de México. “There has been a significant change in car audio systems, going from CD audio to AV in a short period of time. For us to take advantage of this trend we need to further promote the reconversion from AC to AV,” says Mano.

Pioneer Electronics, the Japanese manufacturer of car audio and home theater entertainment products has been in the Mexican market for several years and continues to see relevant opportunities to continue growing in the local arena, especially since most of the Mexican vehicle park corresponds to older models that will have to make an audio reconversion in the future. “The Mexican vehicle park corresponds to over 45 million units. However, new car sales are only around 1.4 million. Since the average age of the vehicle park in the country is 13 years, there is a big demand to replace car audio systems,” says Mano.

Although the characteristics inherent to the Mexican automotive sector suggest there are growth opportunities in the market, Mano says the car aftermarket segment has not benefited from them. “The segment is a little bit flat, but there is great potential.” Mano believes that the Mexican sector could use a boost. “The market is kind of mature, but there are still a lot of older cars on the street. This means that people have the opportunity to upgrade their older audio systems.”

Encouraging people to expedite the media change is key. “This will help us to increase the ratio of cars with AV products,” says Mano. However, for the company to be able to capitalize on this growth, Pioneer needs to introduce more price-competitive products. “In the past few years, we have seen an increase in Chinese and South Korean products in the Mexican market and they have been gaining market share,” says Mano. “Chinese and Korean products have increased their product quality. To remain competitive, we have to reduce our prices.”

To effectively compete with new players, Mano says the company is working to expand its traditional car, DJ, headphones and cycle sports business niches and to venture in providing enhanced car environments. “People want to enhance the environment within their car beyond listening to music, so this is a big chance for us to participate with peripheral products.” As an example, Meno mentions the change in preferences that is taking place in Japan. “Audio demand is falling but there has been an increase in demand for other products, such as cameras and sensors. In Mexico, we have not experienced this boom yet, so it is an area in which we can grow.”

For Mano, offering a new line of products is just part of the transformation the company is bound to experience in the coming years as it transitions from a product supplier to a solutions provider. “In Japan, we have already worked on an alliance with an insurance company. Using the cameras that we set in vehicles, we can help an insurance company obtain information regarding accidents and this helps the company reduce premiums.” Although there are no immediate plans to establish this model in Mexico, Mano says that so far it has been successful in Japan. “For these solutions, we will focus first on the US and Europe. However, Mexico would definitely be an interesting market given the number of accidents that occur here.”

While these solutions might not be coming soon to Mexico, Mano says there are other niches in which the company could participate, including telematics. “In the short term, the idea is to introduce more price-competitive models and in the medium and long term expand to more serious challenges, such as telematics. It will take some time but by doing this, we will differentiate ourselves from our competitors. More importantly, it will help to enhance our brand image.”