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Tuesday, January 4 12:00 AM ET

Auto Makers Forced To
Unbundle Stereo from Vehicles

By Jeremy Mikesell

Detroit, MI – A ruling today by the Michigan Supreme Court will force Ford, GM, Honda, Toyota and Volkswagen to stop installing stereos in vehicles sold in the US by the end of January 2005.

The antitrust suit filed by Sony against the automakers claimed the manufacturers use their monopoly in the automobile market to lock out third-party suppliers of car stereos. The suit also claimed that automakers engineered their cars to make use of alternate stereos difficult or impractical. The sole reason for this is to prevent users from switching to an aftermarket stereo.

John McNeal lead counsel for the automakers had this to say about the ruling and possible appeals. "There are still several arguments in this case that will need to be weighed seriously and we feel that our odds in the appeals process look good. For the sake of the consumer we can only hope that this decision is reversed quickly."

Many in the industry feel the biggest winners are the makers of aftermarket car audio equipment and companies specializing in installing stereos. New cars will no longer be able to play any form of media as shipped, so consumers wishing to listen to the radio or CD's will be forced to have a stereo installed.

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"This is a great decision for the industry and the consumer. No longer will consumers be forced to use the inadequate and seamlessly integrated stereos provided by the automakers," said Michel Tso representative for Sony. "The consumer will only see benefits from this. They will now have limitless options for a stereo and will not be forced to pay for a stereo they don't want."

McNeal counters that this ruling will result in an increase in the base price of all cars of about $1000 for the next five years. "While our cost for the stereo itself is only $15 the cost of retooling production facilities to meet the requirements of this ruling will be staggering. We have no choice but to pass these costs onto the consumer."

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