Why Radio Companies Need to Pay Attention to Projected Auto Sales

After years of holding off purchases, Canadians and Americans are buying cars in record numbers.  In this country, 1.74 million new vehicles rolled off the lots in 2013, up from 1.703 million in 2012.  Meanwhile, it’s projected that more than 16-18 million new vehicles will be sold in the US over the next 12 months.  The radio industry should pay very, very close attention to these numbers.

Why?  Two reasons.  First, there’s a chance for new revenues as manufacturers and dealer groups and individual dealers will probably want to spend more on advertising.  The second reason is more dire.

Just about each and every one of these new vehicles offer new infotainment systems that, at the very least, offer easy connectivity to smart phones.  Others turn the cars into rolling WiFi hotspots.  Either way, vehicles are turning into apps.  Drivers have more information and entertainment options than ever before.  Apps like Pandora, iHeartRadio and can already be found factory installed in many cars.  Navigation/traffic systems like Waze (now owned by Google) are being increasingly integrated into dashboards.  Done right, these apps are far, far more useful than listening for traffic reports on the radio.

The Consumer Electronic Show had considerable space devoted to connected cars last year.  When it opens this week, there will be an even greater emphasis on this technology.  (Geeks&Beats, the podcast I co-host with BNN’s Michael Hainsworth, will be in Las Vegas this week.  Michael will report back.)

In other words, AM and FM radio is becoming more and more marginalized.  If the industry isn’t forward-thinking enough, it could face the same fate as the in-dash cassette player and what we’re starting to see with the CD player.

And it’s not just terrestrial radio that needs to look at the changing listening habits of drivers.  Satellite radio has to change with the times, too.   Maybe SiriusXM should take up Liberty Media’s offer of a buyout.

The next few years are going to be critical for the radio industry.  How will it respond?