Auto sales are still down. That is the news that most anticipated. In seeking a silver lining, one can note that for most manufacturers, sales were better in August than in July. However, sales are still down, and that is still cause for concern. In 2007 there were already 11,024,589 vehicles sold at the end of August. This year, sales have not yet topped the 10,000,000 mark, coming in at 9,794,774. This represents an 11.2% decline over last year.
For satellite radio watchers, the fact that August was better than July should be pleasing. Better sales translate into more subscribers, and with satellite radio installations still ramping up in the OEM channel, the subscriber pool from new car sales remains not only stable but growing.
Many had hoped to see more traction in auto sales at this point. Manufacturers have just begun steep discount programs, and perhaps these programs, combined with dropping gas prices will boost consumer confidence back to a point where people are once again looking to buy cars. In many cases, the sales are helping, but the credit situation is still holding the industry hostage.
From a satellite radio investors perspective the current pace of auto sales still represents stability for the OEM side of the business. In the second quarter there were still record numbers of gross OEM subscribers in satellite. That trend should continue with the third quarter and beyond as manufacturers such as Kia ramp up into meaningful numbers of installations, and Ford, Nissan and others continue their paths towards an installation rate between 70% and 100%.
We would like to caution readers that the satellite installations section of the chart below is a very rough estimate based on announced installation rates.