As the most important automotive electronics applications in the Chinese market, it is expected that the information entertainment product sales will reach 8.1 billion U.S. dollars by the end of 2008, 6.7 percent growth than in 2007. The growth rate is down 15 percent than iSuppli Company forecasted in 2007.

In 2008 global economic growth rate slowing down, results the slowdown in car sales in most countries. Therefore, export orders of China's automotive information entertainment products dropped sharply, especially those for accessories market. At the same time, from July 2007 to July 2008, RMB rose 10.8 percent in value. RMB's revaluation weakened the price competitiveness of exports. In the first half of 2008, the average revocable orders rate was more than 30 percent; some companies even lost half of the equipment orders.

These factors ultimately led to sharp falling of China's information entertainment industry exports, while in 2007 exports accounted for 65 percent of overall sales of information entertainment products. iSuppli Company predicts that in the first half of 2008 the export market accounts for only one-third of the overall industry production.

The products getting the biggest impact of weakness international market involved in entertainment applications, including CD and DVD players. Increased competition and the appreciation of RMB reduce the unit shipments and profitability. In contrast, long-distance information processing products - mainly the Global Positioning System (GPS) navigation system applications, including portable navigation devices (PND), maintained a comparatively high growth rate. However, consumer electronics manufacturers have introduced many competitive products, eroding the profits of the original manufacturers.

A stable domestic original equipment (OE) market is essential

Although the reduce of international order impacts the growth rate of China's car information entertainment industry, there' s no significant slowdown in the domestic market. However, the major natural disasters happened in the first half of 2008, such as China Southern snowstorm and the serious earthquake in Sichuan, had a negative impact on China's overall economy, but also affected the consumers' confidence to buy cars and other bulky goods. Of course, this is also China's Olympic year. The people across the country are focused on this major event, which must also be taken into account.

Since the uncertainty is higher, iSuppli Company brings the 2008 growth rate forecast of China Automotive Information entertainment market down to 6.7 percent. The domestic market forecast had been increased 27.8 percent.

Consumer behavior and demand situation changes are causing tremendous changes in automotive electronics market. For the first half of this year, iSuppli predicted car information entertainment accessories market growth rate would drop, and lower than the original equipment (OE) market. Until recently, China's accessories market growth rate has been faster than the OE market over the years.