China Automotive Infotainment Industry Benefi ts from a Strong Domestic Market
omprising 65.3 percent of the overall consumption of China’s automotive electronics systems, the infotainment electronics segment is so large that its fluctuations impact the entire Chinese automotive electronics industry, according to iSuppli Corp.
Two major trends now are occurring in the infotainment segment. First, aftermarket revenue growth is shrinking, while the OEM segment is expanding. Second, exports are declining—but domestic sales are on the rise.
Strong sales of new vehicles in China’s domestic market prove that OEMs’ initiatives started two years ago to shift their business away from international orders and toward local demand was the right strategy.
One element of the Chinese automotive market that will benefit greatly from increased domestic automotive sales is the infotainment market. iSuppli projects this market will reach $8.9 billion in 2009, increasing 2 12000 percent from 2008. Semiconductor sales for infotainment applications also will grow to $1 billion in 2009, increasing by 1.2 percent from 2008.
Recession Hits China’s Auto Industry
The worldwide automotive industry contracted substantially in 2008 because of the international financial crisis, according to statistics from the International Organization of Motor Vehicle Manufacturers (OICA).
Vehicle makers produced 70.5 million autos in 2008, decreasing 3.7 percent from 2007. Out of this total, there were 52.6 million cars, down 1.1 percent from 2007. The remainder was accounted for by 17.9 million commercial vehicles, down 10.8 percent from 2007.
Faltering economic activities, such as construction, further the demand for commercial vehicles more than that for passenger cars.
The worldwide markets for automobiles in the United States and Europe fell precipitously, while those of Asia Pacific and Africa achieved marginal growth. This difference in sales among various regions illustrated China’s capability to rebound more quickly from the economic downturn than other locations.
Overseas vehicle demand directly affects the exports of China’s automotive infotainment industry. As the most basic element of automotive infotainment systems today, CD/MP3 players are the most ordered product for export. Unfortunately, this market is set to decline in 2009, falling by 16.4 percent to 11.2 million units shipped, down from about13.4 million automotive CD/MP3 players in 2008.
The number of cassette players will shrink sharply mostly because of the rise in CD/MP3 players in vehicles.
Except for some low-end light trucks and mini buses, no vehicle model in China will employ a cassette player in the future. As a result, shipments of cassette players in China will decline over the next three years.
First Half Stimulus
Domestic Chinese production of vehicles during the first half of 2009, reached 6 million units up 15.2 percent from the same period in 2008, according to the China Association of Automobile Manufacturers (CAAM). First-half sales reached 6.1 million units, up 17.7 percent during the same period last year.
During the first six months of 2009, production and sales of passenger cars amounted to 4.4 million units and 4.5 million units respectively, with growth rates of 21 percent and 25.6 percent compared to the same period in 2008.
Because of the government stimulus program, especially the policy to reduce the purchase tax to 5 percent for the small-displacement cars, demand for passenger cars went through the roof.
But since China’s stimulus program will expire at the end of this year, many consumers are making car purchases in 2009 that they otherwise may have made in 2010. Because of this, production and sales of passenger cars are expected to maintain strong growth in the second half of 2009.
Infotainment Benefitted
The strong first-half sales growth for passenger cars of 25.6 percent drove a robust rise in shipments of infotainment products.
Portable Navigation Devices (PNDs) are one of the largest automotive infotainment applications, accounting for about 3.2 million units shipped domestically in 2008. Nowadays, the use of a GPS navigation system is widely accepted as a new driving style in China. Consequently, car makers now treat GPS navigation equipment as the standard configuration for high-end and mid-range cars.
More location-relative services are being derived from navigation products. For example, transportation authorities in large cities, including Beijing and Shanghai are working on the construction of Intelligent Transport Systems (ITS). These systems will provide real-time traffic information to show whether the street is jammed and possibly can offer new routes to a location.
Besides traditionally well-known products such as CD/MP3 players and PNDs, applications with Bluetooth functionality also are becoming more popular in China’s domestic market.
Two major trends now are occurring in the infotainment segment. First, aftermarket revenue growth is shrinking, while the OEM segment is expanding. Second, exports are declining—but domestic sales are on the rise.
Strong sales of new vehicles in China’s domestic market prove that OEMs’ initiatives started two years ago to shift their business away from international orders and toward local demand was the right strategy.
One element of the Chinese automotive market that will benefit greatly from increased domestic automotive sales is the infotainment market. iSuppli projects this market will reach $8.9 billion in 2009, increasing 2 12000 percent from 2008. Semiconductor sales for infotainment applications also will grow to $1 billion in 2009, increasing by 1.2 percent from 2008.
Recession Hits China’s Auto Industry
The worldwide automotive industry contracted substantially in 2008 because of the international financial crisis, according to statistics from the International Organization of Motor Vehicle Manufacturers (OICA).
Vehicle makers produced 70.5 million autos in 2008, decreasing 3.7 percent from 2007. Out of this total, there were 52.6 million cars, down 1.1 percent from 2007. The remainder was accounted for by 17.9 million commercial vehicles, down 10.8 percent from 2007.
Faltering economic activities, such as construction, further the demand for commercial vehicles more than that for passenger cars.
The worldwide markets for automobiles in the United States and Europe fell precipitously, while those of Asia Pacific and Africa achieved marginal growth. This difference in sales among various regions illustrated China’s capability to rebound more quickly from the economic downturn than other locations.
Overseas vehicle demand directly affects the exports of China’s automotive infotainment industry. As the most basic element of automotive infotainment systems today, CD/MP3 players are the most ordered product for export. Unfortunately, this market is set to decline in 2009, falling by 16.4 percent to 11.2 million units shipped, down from about13.4 million automotive CD/MP3 players in 2008.
The number of cassette players will shrink sharply mostly because of the rise in CD/MP3 players in vehicles.
Except for some low-end light trucks and mini buses, no vehicle model in China will employ a cassette player in the future. As a result, shipments of cassette players in China will decline over the next three years.
First Half Stimulus
Domestic Chinese production of vehicles during the first half of 2009, reached 6 million units up 15.2 percent from the same period in 2008, according to the China Association of Automobile Manufacturers (CAAM). First-half sales reached 6.1 million units, up 17.7 percent during the same period last year.
During the first six months of 2009, production and sales of passenger cars amounted to 4.4 million units and 4.5 million units respectively, with growth rates of 21 percent and 25.6 percent compared to the same period in 2008.
Because of the government stimulus program, especially the policy to reduce the purchase tax to 5 percent for the small-displacement cars, demand for passenger cars went through the roof.
But since China’s stimulus program will expire at the end of this year, many consumers are making car purchases in 2009 that they otherwise may have made in 2010. Because of this, production and sales of passenger cars are expected to maintain strong growth in the second half of 2009.
Infotainment Benefitted
The strong first-half sales growth for passenger cars of 25.6 percent drove a robust rise in shipments of infotainment products.
Portable Navigation Devices (PNDs) are one of the largest automotive infotainment applications, accounting for about 3.2 million units shipped domestically in 2008. Nowadays, the use of a GPS navigation system is widely accepted as a new driving style in China. Consequently, car makers now treat GPS navigation equipment as the standard configuration for high-end and mid-range cars.
More location-relative services are being derived from navigation products. For example, transportation authorities in large cities, including Beijing and Shanghai are working on the construction of Intelligent Transport Systems (ITS). These systems will provide real-time traffic information to show whether the street is jammed and possibly can offer new routes to a location.
Besides traditionally well-known products such as CD/MP3 players and PNDs, applications with Bluetooth functionality also are becoming more popular in China’s domestic market.
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