Cars and Radio: Together Forever?

Michael Hedges March 8, 2010 Follow on Twitter

Through all the automobile design trends over seventy years several components have never changed; seats, motor, wheels and a radio. Popular music has chronicled “drivin’ in my car, turnin’ on the radio.” Consumers wouldn’t buy a car without a radio. Is there a problem?

The annual Geneva Auto Show, running March 4 through 14, is a show-off event for car-makers, car lovers and, not to forget, trend watchers. Hybrid cars were the buzz of the event this year, said the automotive journalists, though hedge fund managers and bankers circled the more traditional Ferraris and Lamborghinis, bonus cash in pocket. Some things never change.

Off in a corner, though, was the Mini, always cute and terminally cool. BMW’s Mini – through the Mini Connected option - now offers an in-dash internet radio, “the first car manufacturer to offer this capacity in a production car,” said the press release (March 2).  Other after-market internet radios have been available for a couple of years. The Mini Connected internet radio streams content from RadioTime, an internet radio aggregator, through an adapted iPhone. 

Radio began appearing in automobiles almost as soon as automobiles became mass market. Motorola (“motor”-ola) offered a tube-type radio receiver for cars in the 1930’s. By the early 1950’s Blaupunkt had an FM receiver for cars. When transistors arrived, in the 1960’s, radios in cars became a standard option. For a generation, though, radio receivers were ‘strapped’ into cars; on the doors, in the boot, under the dashboard. Radio receivers of every variety  - AM, FM, DAB, HD/IBOC, satellite radio and now Web radio – can be found somewhere for automobiles. 

Obviously, the automobile is the radio space. People can’t – or, at least, shouldn’t – watch TV or read the newspaper while driving. Swiss law, for example, forbids automobile drivers talking on mobile phones. It’s the distraction thing, you see. Passengers can, within reason, do what they like.

Radio broadcasters do not want to lose any visibility in the valuable automobile platform. In the UK more than one in six radio listening hours (18.3%, RAJAR Iposo MORI RSMB Q1 2009) are in the automobile, the percentage remaining stable for years.  Between 0800 and 1000 – morning drive – 42% of employed Germans listen to radio and one in three of them listen in their cars (ma Radio 2009 I). During the afternoon rush hours – 1600 to 1800 – nearly half (48%) working Germans listen to radio are in their cars.

Digital transition for radio broadcasters has been fraught with complications unlike those faced a generation ago when the FM analogue platform became the de facto standard. Neither consumers nor automobile manufacturers have put the accelerator to the floor for digital radio receivers in their cars. Supporters of radio platform change have clamored for legislation, directives, rebates.

One legislative plan for digital radio switch-over affecting new cars purchased has been offered by the French government. Automakers are not amused.

“Even though the automotive industry supports the digitalization of radio broadcasting,” said Association of European Vehicle Manufacturers (ACEA) Regulators Affairs Director Wolfgang Reinhardt in an email. “We cannot accept that this is enforced in one single European country as this would be in contrast to the internal market principle. As there are perhaps more than 200 million vehicles on European roads with an analogue radio it is obvious that a European legislation cannot just switch to digital radio without sufficient lead time. Consequently, the automotive industry is following a market based approach where analogue and digital radio co-exist as long as customers buy either the one or other form and use it during the lifetime of the vehicle. Customers, who are interested in a digital radio can order it already today for many cars as an option.”

The UK automobile industry is equally distress at ramifications from a forced analogue to digital radio switch-over. The House of Lords Communications Committee has entertained comments and suggestions from many stakeholder on the proposed 2013 offering of DAB receivers in all new automobiles. The Society of Motor Manufacturers and Traders offered concerns that “meeting a deadline of 2013 will be a challenge for vehicle manufacturers who began product development in 2009, but we expect it to be achievable. A bigger challenge is represented by those models already on the market or most of their way through the development cycle, where the manufacturers will have to decide whether to divert engineering resources to the task of digitally-enabling them or provide new vehicles with digital converters.”

“Drivers will, therefore, be reliant on the use of digital converters to enable continued use of their analogue radios after 2015,” said the SMMT statement quoted in UK media analyst Grant Goddard’s blog (Read it here). “As vehicles have very long lives, most of the vehicles first registered since 2006, if not earlier, will still be in use in 2015. It is likely that over 20 million vehicles will have to be so fitted, and very likely that most of the necessary sales will be made in the few months before the date for digital migration. The commitment for a cost:benefit study to be conducted before any digital migration date is announced is therefore welcomed by vehicle manufacturers because it should firmly identify the progress made towards digitally-enabling the car parc.”

Goddard asks two questions. “The message from the car industry seems clear – why should they risk their reputations by installing DAB radios that will suffer poor reception due to lack of a robust DAB radio transmission system in the UK? The bigger question is – why would consumers pay extra for a DAB car radio that offers increasingly little additional mainstream content over a standard FM radio?”

Car makers are, after all, in the business of designing and building cars people will buy. “Our focus is on a well-integrated automotive environment to ensure minimal distraction in operating these systems,” explained BMW’s head of entertainment Michael Weber in an email, reminding us “the main use case for a car is driving.”

Weber argues for keeping things for the consumer simple. “The traditional radio program will still have a strong position in an entertainment environment in a car: it has regional or local editorial content, in general a good balance of talk, news and music and you just need to switch it on and you are entertained. “

“Automobiles are the perfect place to listen to music because this kind of entertainment is most compatible with driving. Therefore, we provide excellent sound systems and a quiet ambience. Additionally, many people enjoy their car as a really private cabin traveling between work and family having the ability to relax while being entertained by radio or alternative music sources before they enter the next meeting or family event.”

Consumers will follow manufacturers’ lead, said TrendONE trend watcher Sven Tollmien in an email. “The consumer still sticks to the offer of the car manufacturer, as he doesn’t know what possibilities he has….It is the same with the iPod. Several years ago nobody heard of or thought of carrying a small device with space for more than 30 hours of music. Now almost everybody owns an iPod.”

Guaranteed to cause heart seizure among broadcasters, Tollmien offered that “radio will play a small role in the whole concept of in-car entertainment. Loads of other services will the keep the customers attention. Just imagine an iTunes for cars… But the radio has still the big advantage of passive and relaxing entertainment. This combined with the advantages of digitalization and personalization will make radio a relevant source for entertainment and information.”

Broadcasters and automakers are together in the quandary of changing consumer behavior. "A few weeks ago we expected a European car market down 10 percent,” said Renault COO Patrick Pelata ahead of the Geneva Auto Show. “This assumed an economic upturn.” Credit Suisse analyst Stuart Pearson, in a report to investment clients, pointed to the “triple witching” of cash-for-clunkers programs ending, cheap credit ending and taxes rising as potentially propelling the European auto industry to an even deeper drop in sales volume. The same “triple witching” throws more cloud over the broadcasting sector, both private and public.

Automobile manufacturers will do what’s necessary for satisfied customers. Weber throws the entire question back at the radio broadcasters: “Radio could even put a stronger focus on automobiles and try to understand the needs of our customers to place excellent radio programs into our cars.”

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