Grey products dominate Rs 300-cr car audio market

New Delhi, January 20: | Updated: Jan 21 2002, 05:30am hrs
Despite customers upgrading themselves to premium car audio systems and becoming more brand conscious, the Rs 300-crore car audio market (after car sales) still continues to be dominated by grey market which holds almost 75 per cent of the market share in terms of volume and more than 50 per cent in terms of value.

The industry claims that there has been a shift towards the organised sector because all leading brands are available in the country and there has been brand awareness in the last couple of years.

However, they agree that the grey market continues to flourish because the basic model is still the highest selling segment and customers opting for this product look for a cheaper alternative. Another reason they attribute to the growth of grey market is that the small and medium cars come without a car stereo from the manufacturer.

Kenwood’s manufacturer and distributor for India Nippon Audiotronix managing director KS Goindi said, "The base model has the highest sales, but they are bought largely from the grey market. This segment has a steady growth of 12-15 per cent."

He said, "The real growth is in the upper segment. While the Rs 15,000 to Rs 22,000 segment is expected to grow by atleast 20 per cent in the next few years, the top segment Rs 25000 - Rs 40000 segment will grow 30-40 per cent."

Kenwood recently forayed into the car video entertainment with its new range of video monitor VCD changer and DVD players. While the company agrees that it does not expect to do wonders in the video segment, it is confident that this segment will grow slowly and surely. According to Mr Goindi, just as consumers are upgrading their cars they are also looking at premium car audio systems that go with the interior of the car. He said, "Its not just music in the car, but luxury and lifestyle that they look for. Customers in this segment look for a product which integrate with their car. Hence they do not opt for the grey market."

He agrees that price is a major factor that helps grey market flourish. While the organised sector offers a basic model with speakers for nothing less than Rs 10,000, the grey market products are available between Rs 4,000 - Rs 7,000 perhaps even slightly cheaper.

Blaupunkt, which is the market leader in this segment also share the same view. Blaupunkt’s divisional manager (sales mobile communications) Ajay Sahney said, "Though premium cars come with stereo system, the customers still look for an upgraded system where as in the basic segment it is more of a need than a lifestyle."

Keeping in with the trend, the company recently introduced its Skyline range priced between Rs 22000 - Rs 35000.

The company is hopeful that this segment will grow by around 35 per cent. He said, "People are upgrading to remote controlled stereo systems which is priced around Rs 15000. CD changer is also the in thing." The C Segment and D segment car owners are opting for these products.

The total sales in the car stereo segment is 6.5 lakh pieces per annum. Of this, 5 lakh pieces sold are the basic model. The grey market has the lion’s share of around 80 per cent in this segment. The premium models account for around 1.5 lakh pieces.

While the grey market has a market share of around 75 per cent, the organised sector has 8 players vying for the remaining 25 per cent organised market.

They are Alpine, Kenwood, Blaupunkt, Philips, Sony, JVC, Clarion and Panasonic. Sony, JVC and Panasonic are present only in the after sales market.

The rest are also original equipment manufacturers for car manufacturers besides being major players in the after car sales market.