Avis and Budget to Offer SiriusXM on Most Rentals
Avis Budget Group, Inc. has announced that SiriusXM is now available to a majority of Avis Car Rental and Budget Car Rental customers via factory-installed satellite radios. The new offering will give customers easy access to satellite radio… for a price. Previous to this development, Avis and Budget offered satellite radio via a plug and Play system that had the radio connected to the car through a cigarette lighter.
Avis and Budget have carried cars with in-dash satellite radio systems for quite some time, but typically that was not the method used by the car rental company to offer satellite radio. Approximately 60% of the rental fleet has dashboard equipped satellite radio systems. SiriusXM will be available as a rental option for $6.99 for the first rental day, and $3.99 for each additional rental day; $19.99 per week (rentals of five to seven days); and a maximum of $29.95 per rental.
From an investment standpoint there are some things to consider here:
- Consumers will get a much more dynamic and up-to-date experience with the dashboard system. This could help to market satellite radio to those that are not familiar.
- There will be deactivations of subscriptions as the plug and play models come off of the market. This will not likely be huge issue, but will impact the churn numbers as plug and plays come off line. In theory, it will be offset by “in dash” radios getting activated.
- Satellite radio in car rentals has never been a big draw of new subscribers, but it is an endeavor worth doing. I have rented a car many times in which the satellite radio was already active.
- This shows that the company is still progressing on improving its business model across platforms.
Do not look at this news to be a driver. Look for minimal impact on share price. This type of news is simply a small positive that keeps the proverbial ball rolling in the right direction. Stay Tuned!
Once again, those interested in the vagaries of the SXM stock price are scratching their heads. Perhaps it is as simple as the company is a bargain at the current sp. The market tends to over react so even the Avis and Budget rental car announcement could cause an impetus for momentum. Or it could simply be the beginning of the Spring quarter where funds are convinced that the sp will rise. Or even a return to the behavior of the stock before the CC. Regardless it is certainly welcomed.
Spencer,
March sales turned out a little bit better than expected by about 45K. The whole Q1 sales are also slihgtly more than last year. So, what are your sub number expectations? Are they going to exceed 400K or not. My take is that they should be somewhere not too far from that. To me, any number over 400K would be a very strong result.
I am less concerned about other metrics because their expenses will be the smallest in five years on a relative basis with reasonable debt service expense and infrastructure expenditures with no sat build or launch costs. SAC may approach $40. Hopefully, ARPU exceeds $12.50 although I do not know how Piolin subs may affect the ARPU because they are a first.
To conclude, Q1 will come with a lot of “firsts” from no sat launch and build costs to no refinance costs to much smaller ineterest on debt to Agero revenue, etc. I am very curious what will come out. I expect the results in the range of positive to very positive.