Auto Sales Nosedive
Sales figures from auto manufacturers are starting to hit the wires, and the news is not good. The poor sales in the auto sector are now so bad that even with increased penetration of satellite radio installations, there will be an impact to the sector.
GM sales were off by an astounding 45%, Ford sales were down 30%, Honda took a 25% haircut, and Toyota was down 23%.
Many were expecting bad news, but sales down 45% is a big number to swallow. It is little wonder that analysts have taken it upon themselves to lower subscriber targets for satellite radio. As with anything, one must also look for a silver lining, but in this case that is a hard task. Sure, Sirius XM will have less spent on subsidies, but in the end, they still do need to grow their subscriber base, and the focus on the OEM channel makes their numbers vulnerable with auto sales at record lows.
Perhaps it is time to shift gears. Perhaps the company should throw some marketing support behind the a-la-carte receiver and the new XMP3 player. If consumers are holding onto their cash, perhaps they will be inclined to make their time in the car more enjoyable via satellite radio.
Times are indeed hard. Consumers are clearly holding onto cars longer. Investors should watch for analysts that have not issued reports recently to begin issuing updated models soon. The car news today may even bring out new reports from those who had already updated models, but did not anticipate a 45% nosedive by GM, which is the biggest satellite radio contributor in the OEM channel.
Position: Long SIRI
sorry i posted this under wrong article by tyler
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The silver lining is that if GM tanks, then Sirius won’t have to pay for the outrageous deal that XM made with them. People will still buy cars just from other manufacturers. Or because GM gets so much from the XM deal maybe they will put more radios in their vehicles to get more cash.
Less vehicles bought now means more vehicles bought later.
I think the silver line to the cloud should be that it cant get any worse. If Gm sales are down 45 percent if it does get any worse there wont be a Gm. Sooner or later the auto market will pick back up just like everything else and when it does the growth will increase again too. The only question is can siriusXm weather the storm long enough to see that time? They should focus on 100 percent penetration of satellite radio installations in new cars. Every new car made should have satrad. They should also allow 3 day trails for unactivated radios. Just so customers can get a feel for just how good siriusXm is as a product.
Consider Maslow’s Hierarchy: At the base people need essentials–food, shelter, sex. At or very near to a base revised for the modern world people also need transportation. Just a matter of time before the auto market will start to recover due to pent up, fear-blocked demand. Guess that means for OEM subs? Unfortunately it seems the ride in the old minivan will get bumpier before I can trade it in for a cool new coupe equipped with a factory installed SATRAD system.