In-car channel a long way from full throttle
The Middle Eastern consumer is typically a luxury car enthusiast — who must be seen with the latest electronics gadgets — so why then has the in-car entertainment market been so disenchanting in the Middle East?
The value of the global in-car entertainment market is set to triple by 2012 as a result of soaring demand in the US, Europe and Japan, according to market intelligence firm iSuppli. Expectations in the Middle East, however, are not quite so rosy.
During their recent visits to Dubai, CEA bosses Gary Shapiro and Patrick Lavelle were dismayed by the mediocre demand for in-car audiovisual - falling way short of their understandable expectations.
"The original equipment car market seems to be very sophisticated. There's a tremendous amount of luxury vehicles, but I haven't seen a relatively developed after-market for car stereo, digital radio or navigational devices," exclaimed CEA president Shapiro.
Vice-chairman Lavelle couldn't account for the shortfall in demand in the Middle East for in-car accessories: "Consumers across the world are all the same, as far as I'm concerned - whether it's a family in the US or a family in Saudi Arabia - an in-car mobile video system is something that entertains the kids on a long ride," he added.
Scouring shelves of power retailers in the region for in-car entertainment accessories often proves a fruitless task. Car accessory installation requires specialist knowledge and, until now, household names like Jumbo Electronics or Sharaf DG have not trained staff on car installation procedures to really be able to rouse demand for such products in their outlets. Consumers in the UAE, for example, are typically forced to visit places such as Karama or Sharjah and render the services of independent dealers.
"Car audio products are generally sold through a separate channel - not really through retail chains or hypermarkets," observed Nusrath Khan, marketing manager for car audio at JVC. "For car audio, installation needs to be carried out. There are separate dealers in each country who are closely related with car-related accessories - these are the people who are the direct resellers of car products in the region," he added.
However, consumers appear to be reluctant to put their cherished vehicles in the hands of these dealers because of questions surrounding the reliability of their services, suggests expansive power retailer Sharaf DG.
"The car audio industry in the UAE has been operating in an unorganised sector," declared Nilesh Khalkho head of merchandising at Sharaf DG. "People who bought cars didn't want to go to these streets to get their vehicles touched. A lot of wiring needs to be done, and if they don't do the car electricals right, it can lead to much bigger problems," he added.
Khalkho is not alone in that thinking, with other sources concurring that doubts over the credentials of car accessory installers is holding back the in-car entertainment market in the region. JVC's Khan admitted: "That's a big issue in the Middle East - you can hardly find good installers. There are so many people doing car installation but not everybody is good at it."
Khan claims that JVC is taking steps to resolve this issue and will soon be offering installation training to dealers in the region.
But with the scope of opportunity on offer, power retailers are fast realising the lucrative opportunity the in-car entertainment market offers. Jumbo Electronics has begun stocking in-car entertainment products on its shelves and is offering to recommend suitable installation firms for consumers. Sharaf DG however is taking things a step further - stocking a comprehensive selection of in-car entertainment products in its new big-box outlet, and striking an alliance with a local dealer.
"Sharaf DG has tied up with Yellow Hat - which specialises in car systems installation - and we will be offering this service shortly. In Sharaf Times Square we not only install, we also offer warranties on our installations," revealed Khalko.