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The purpose of a loudspeaker is to convert the audio signal in its electrical form to a pressure wave that we can perceive as sound. Like any component in a car stereo system the ultimate goal of the speaker is to do its job without adding any coloration (changing of the original sound) to the audio signal. Ideally only one loudspeaker per side would be needed to reproduce the entire audio spectrum. Unfortunately a speaker that can produce low frequencies has too much mass to be able to produce the higher frequencies. This is why we have coaxial and component speakers. Subwoofers are also used in order to produce the extreme lows of music with impact that can be felt as well as heard. Speakers have an extreme range in quality and price. They also have the greatest impact on the overall sound of a car stereo system.
When shopping for car speakers be sure and listen to the speakers before you buy them. There is no other way to know how the speakers will sound to you. Be sure to bring music that you normally listen to when you audition the loudspeakers. This will give you a better idea of how the speakers are reproducing sounds you are familiar with. Listen closely for low level details and how natural different instruments sound. When you have narrowed down your choices to a couple of different speakers, audition them at length. A poor quality car speaker will become tiresome to listen to, usually because of an exaggerated low and high end. Be sure to adjust the bass and treble as well as the volume to levels that are comfortable to you. Beware of salespeople that do an A/B comparison of loudspeakers for you. When switching between speakers, unscrupulous salespeople will turn up the volume slightly on the more expensive speakers to persuade you to buy them. It is an established fact that people tend to prefer the loudspeakers that they determine to be louder.
Also when choosing loudspeakers, be realistic. If you do not want to modify your existing speaker holes, shop for speakers that will fit in the current space available. Keep in mind depth considerations, especially in doors where speakers may interfere with windows rolling down, dashes where speakers may be limited by ducts for heat and air, and rear decks where depth is limited by torsion bars that run underneath the rear deck. When shopping for subwoofers don't get crazy trying to stuff your car with subwoofers. Consider how much room you have and how much of it you are willing to sacrifice to achieve the low end. This will determine size as well as enclosure type for the woofers you choose.

Coaxial speakers

The least expensive and most common type of car speaker is the coaxial. The coaxial consists of a midrange/woofer with a tweeter placed over the cone, either on a bridge or on a pole that extends from the middle of the cone. These speakers are made in sizes that will exactly fit most brands of vehicles. Advantages of this design include low cost, ease of installation, and a speaker that more closely approaches the one loudspeaker ideal, also called a point source, where all frequencies appear to originate from the same location. The disadvantage of this design is a generally lower sound quality for the majority of coaxials available versus the majority of matched component sets available.

Aspects and features that need to be considered when purchasing coaxials are:

Frequency Response: This is the how much of the audible spectrum a loudspeaker can reproduce. The value should be given with a rating of +/- some number of decibels, usually three. The greater the frequency range, the better up to 20kHz and down to 20Hz. Realistically a coaxial speaker will not play much below 80Hz. That's why we have subwoofers.
Mounting Depth: This is the distance that a speaker needs behind its mounting surface for its basket and magnet structure. This can be very important when speakers are being installed in the rear deck of automobile that has torsion bars in the trunk or door speakers with window clearance problems.
Power Handling: This is the amount of power a speaker can withstand before failing after a given amount of time. The most important number is the speakers continuous or RMS (root mean square) power handling. Peak power handling means virtually nothing.
Sensitivity: This is a reference measure of how loud a speaker will be with a certain amount of power at a certain distance. The standard is one watt at one meter. By halving the distance an increase of six decibels will be realized and doubling the power will increase the output by another three decibels. This is a trick used by some companies to make their speakers appear more efficient than they are. Most loudspeakers will be in the ninety decibel range. Keep in mind that a difference of three decibels is equivalent to a doubling of the amplifier power.
Tweeter Protrusion: The height that a tweeter sticks above its mounting surface. This will need to be considered when coaxials are being mounted in factory locations under factory grills.

Component speakers

A component loudspeaker is a single driver designed to reproduce frequencies in a given range. Component speakers are used in tandem with other component speakers to reproduce the entire audio spectrum. As few as two and as many as four or more different size drivers can be used to create a component set. The drivers are kept operating within their designed audio band by a series of frequency filters known as a crossover. By using a crossover to keep speakers operating within a certain range the speakers do not become distorted by trying to reproduce frequencies that they are physically unable to reproduce.
In order to keep the point source attribute with a set of component speakers these speakers must be placed very near each other. However this is not always done in practice. Sometimes a midrange/woofer will be placed in a door while the tweeter may be placed in the front corner of the front window (sail panel) or on the pillar that separates the windshield from the door frame (A-pillar). This is done to raise the apparent position of the musicians on an imaginary stage in the front of the vehicle.
It is generally considered desirable to have a sound system that gives the impression that the musicians exist on a stage across the top of the dash, extending beyond the edges of the dash. Raising the tweeter level can help in this goal but other problems occur such as time alignment, the difference in time it takes the low and high frequencies to reach your ears. Ideally all frequencies should arrive at your ears at the same time.
Advantages of this design are generally better sound and more options for installation. Disadvantages are added cost, more complex installation, and possible problems with time alignment.

Aspects and features that need to be considered when purchasing components are:

Frequency Response: This is the how much of the audible spectrum a loudspeaker can reproduce. The value should be given with a rating of +/- some number of decibels, usually three. The greater the frequency range, the better up to 20kHz and down to 20Hz. Realistically a component speaker will not play much below 80Hz. That's why we have subwoofers.
Mounting Depth: This is the distance that a speaker needs behind its mounting surface for its basket and magnet structure. This can be very important when speakers are being installed in the rear deck of automobile that has torsion bars in the trunk or door speakers with window clearance problems.
Power Handling: This is the amount of power a speaker can withstand before failing after a given amount of time. The most important number is the speakers continuous or RMS power handling. Peak power handling means virtually nothing.
Sensitivity: This is a reference measure of how loud a speaker will be with a certain amount of power at a certain distance. The standard is one watt at one meter. By halving the distance an increase of six decibels will be realized and doubling the power will increase the output by another three decibels. This is a trick used by some companies to make their speakers to appear more efficient than they are. Most loudspeakers will be in the ninety decibel range. Keep in mind that a difference of three decibels is equivalent to a doubling of the amplifier power.