Frost: Promising Investment Avenues in N. American Light Vehicle Infotainment Systems Market
July 31, 2007 // Published as a news service by IHS
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There is significant potential for growth in the North American light vehicle infotainment systems market due to a combination of factors, according to Frost & Sullivan, such as higher installation rates among automakers, declining system prices and greater consumer demand for entertainment options in their vehicles as daily travel times continue to increase.
Recent analysis from Frost & Sullivan of the North American light vehicle infotainment market found earned revenues of approximately $2.90 billion in 2006, with estimates to reach $5.30 billion in 2011.
"Close to 40% of all new luxury cars and sports utility vehicles (SUVs) in North America have had rear seat entertainment systems installed in them," said Frost & Sullivan research analyst A. Sethuraman.
"Light vehicle sales in the U.S. and Canada touched nearly 18.6 million units in 2006, reflecting the huge population of light vehicles in use in this region and the potential for infotainment systems to achieve increased penetration rates."
Analysts said while growth prospects appear promising, however, automotive infotainment companies face the challenge of manufacturing systems that offer advanced and appealing features at prices that are acceptable to consumers.
With intensifying competition and the threat posed by low-cost Asian infotainment companies, particularly from China, the pressure on operating margins is fast increasing.
Even though prices of infotainment systems have been steadily decreasing over the years, analysts said they have not been able to make any significant headway into the bulk market of high-volume cars, since many consumers continue to perceive them as expensive luxury goods.
"Acquisitions of regional infotainment companies, backward integration with technology companies and strategic alliances and partnerships in the distribution channel may help North American infotainment companies control costs and improve operating margins,"” said Sethuraman.
Overall, analysts said the North American light vehicle infotainment systems market shows attractive growth rates and offers good investment opportunities to private equity companies, venture capitalists and asset management companies.
Source: Frost & Sullivan.