As OE audio systems become more advanced, it is challenging for aftermarket manufacturers to create systems that provide true enhanced value. That said, in 2008, 39 percent of light vehicle owners installed aftermarket audio products, and audio components are still the most popular electronic products, beating out both navigation and cell phone accessories.

Even with advanced OE systems, more than 45 percent of vehicle owners are motivated to purchase aftermarket audio systems because they believe the quality improves the driving experience.

The aftermarket is still the channel of choice for replacement audio components with 86 percent of vehicle owners (both new and used) seeking services from aftermarket providers. Of the 14 percent who use the dealer channel, 39 percent were used vehicle owners. Seventy-two percent of used vehicle owners who chose the dealer channel did so because they like the product quality provided by their vehicle manufacturer.

Despite increased complexity in audio component installation, 63 percent of those who had audio installed over a 12-month period did so themselves or with a friend.

And in 2008, the top location of choice for purchasing audio components was a mass merchandiser. Although 13 percent of vehicle owners chose the dealer for audio installation, only 5 percent actually reported the dealer as the source for their audio components. Automotive retailers were the second most popular choice; however, this channel is under a direct threat from Internet retailers and online bidding sites. As the industry shifts toward low-cost providers, price competition grows, revenues become a challenge and it becomes harder for installation and performance specialists to reap financial benefits.

Frost & Sullivan's research indicates that modifiers and general vehicle enthusiasts tend to install products in a common sequence. It simply makes sense that tires and wheels go together or that body modifications happen after the vehicle's suspension is lowered. With audio, installation is just as likely to happen at the beginning as it will in the end of the enhancement seequence. Audio modifications can be expensive, so cost can be a limiting factor. But when audio "mods" are performed really comes down to the owner's value of the experience that audio provides.

In 2009, the audio industry faces two significant challenges: low vehicle sales and cost competition resulting in excess inventories of product resulting from the global economic downturn. Similar to other accessories, the demand for audio is highly dependent upon the exchange of vehicles, meaning the purchase of a new vehicle or the acquisition of a used vehicle is often the primary stimulus driving audio acquisition.

Signs indicate Canada and the U.S. are emerging from the recession; however, most consumers continue to be frugal. In 2009, compact vehicles are tracking at 17 percent of total vehicle sales. This is a category where historically consumers have been the least reluctant to invest in high-cost accessories.