Car Amplifiers, commonly called amps, are electronic devices that's sole purpose is to amplify the sound and allow for the owner to alter sounds from the amplifier for the desired depth and sound effects. Most headunits come with built in amplifiers but they are usually insufficiently powered to deal with powerful sound packages.
External amps are common in sound competition cars, in fact, I can't think of a single sound competition car that I have ever seen without one or several amplifiers, but I rarely see them in vehicles that do not have aftermarket sound packages that are significantly more powerful than what was originally installed in the car.
Car amplifiers are really not necessary for drivers who have a traditional sound package or an OEM stereo package. They are more commonly used when a subwoofer is involved because the built in amplifier in the headunit is not nearly powerful enough to deal with wattage required to produce the desired subwoofer effect.
Subwoofers are extremely powerful speakers and need a great deal of power to run appropriately. Because internal amplifiers are pretty basic and underpowered hooking up a subwoofer to a traditional internal amplifier will likely cause subpart sound and bass, or in some cases, won't work at all. In such cases an external amplifier mounted into a trunk can correct sound distortion and help to power an amplifier.
People who are interested in adding serious horsepower to their sound system will likely need an amplifier that is external from the headunit but it is not a necessary item for your basic sound package and I honestly wouldn't suggest it for someone who is only looking to change out the speakers without adding a subwoofer. They also take power away from the vehicles charging system and when inappropriately installed can cause a slew of problems related to the amps power and ground cables.
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