Happy Motoring: More Entertainment, Less "Are We There Yet?"

"Don't make me stop this car!" You won't hear that from so many frustrated parents anymore as the proliferating entertainment systems in today's light vehicles occupy their children's attention. Demand for OEM and aftermarket entertainment systems in light vehicles in North America grew to $6.97 billion in 2003 from $5.26 billion in 1998, a 5.8% annual growth rate. By 2008, the figure should reach $9.45 billion for a 6.3% annual growth rate.

The numbers come from "Automotive Entertainment Systems in North America," a 204-page study by the Freedonia Group Inc., a Cleveland-based market research firm. Growth varies widely among the three market sectors in the region: the U.S., Mexico, and Canada (see the table). The study concludes that Mexico is experiencing the fastest growth because of high levels of export-focused light-vehicle production and increasing local demand.

The largest product category has been conventional am/fm/cassette/CD systems. But these sales will decline as new "technology bundles" are introduced. Several newer systems will increase their share of the market, like multimedia DVD players ($2 billion in 2008), satellite radio systems ($2 billion), audio systems with data-compression technologies ($1.2 billion), and hard-disk drive (HDD) multimedia systems ($740 million). Satellite radio recently entered the mainstream in the OEM arena as well as in the aftermarket, Freedonia adds.

But the increasing robustness of micro-HDD technologies also will play an important role, possibly bringing a paradigm shift, the study says. These drives will permit the expansion of services without the addition of bulky new hardware. Besides entertainment media, the drives could be used to store navigation and other digital data.