Cash For Clunkers Subscribers Are Months Away
Don’t get me wrong, the program has its merits and it does have benefits for satellite radio, but those benefits are months away. So far the program has involved 250,000 184,304 cars. A healthy number, which does not include car sales that did not participate. If however you think the program is going to boost OEM subscriptions in significant numbers, think again. The program was mostly in July of 2009. The numbers will not be reflected in the conference call for Q2 and in many cases, because of how the OEM deals are structured, will not even help boost Q3 significantly.
The Top Ten Cash for Clunkers New Cars:
1. Ford Focus – These cars were likely already counted in the subscriber rolls in Q1. Some will boost Q2 if the cars were manufactured between April and June. More likely than not, the initial run from cash for clunkers has served to even out backlogged inventory. The Focus is not one of Ford’s bigger contributors in terms of penetration rate.
2. Honda Civic – A big helper for Q3. Honda cars are counted as promotional subscribers at the time of sale. Thus, satellite radio equipped Honda’s will boost Q3 subscriber numbers.
3. Toyota Corolla – Toyota cars that come with satellite radio receive a promotional period of the service, but are never counted as subscribers. A Toyota that sells in July will come with a three month trial. If the consumer elects to keep the service after the trial, then and only then will they be counted as a subscriber. Thus, satellite equipped Toyota’s (of which there are very few Corolla’s) can not help the subscriber number until October 2009, or Q4.
4. Toyota Prius – The situation here is similar to the Corolla listed above. A possible subscriber in Q4, but Toyota is not doing a heavy number of installations.
5. Ford Escape – More likely than not, these cars were already in the subscriber rolls in Q1. Given that the popularity of SUV’s was down sharply, I would estimate that very few Ford escapes were manufactured in Q2.
6. Toyota Camry – More satellite radio installations in this model, but again, no possible subscribers until after the promotional period.
7. Dodge Caliber – Heavy installation rate of satellite radios, but Chrysler was closed from production for much of Q2. The vast majority of these sales were already in the subscriber rolls in Q1.
8. Hyundai Elantra – The Hyundai deal is very similar to the Toyota deal. No possibility of a subscriber until after the free trial period. Hyundai is fast approaching a 100% installation rate, so these sales will be helpful in Q4.
9. Honda Fit – Similar situation as the Honda Civic.
10. Chevy Cobalt – GM is a sub at the time of sale. GM also is a large contributor to the satellite radio rolls. These will be Q3 subscribers.
Should the program gain more footing, and sales continue to increase, satellite radio will see the benefits within the next quarter or two. The key is a normalized OEM channel with consistent sales and production. We have spoken to several dealers who have a “call list” for people who want to participate in the Cash For Clunkers program if and when it kicks into gear again.
Simply stated, the program might kick start the OEM channel, but it is sustained growth and a better annualized run rate that will help Sirius XM the most. Satellite radio investors should enjoy the positive side of the news, but temper it with the reality of how subscribers are counted.
UPDATE The widely accepted assumption was that the program has involved 250,000 cars. The latest data through August 5, 2009 is that the number is actually 25% less and at about 185,000 cars broken down as follows:
General Motors 18.7%
Toyota 17.9%
Ford 16.0%
Honda 11.6%
Chrysler 10.6%
Nissan 7.0%
Hyundai 6.6%
Kia 3.8%
Mazda 2.3%
Subaru 2.2%
Volkswagen 1.9%
Suzuki 0.4%
MINI 0.3%
Mitsubishi 0.3%
Smart 0.2%
Volvo 0.1%
All Other 0.1%
Position: Long Sirius XM.
Can’t you have a more optimistic view of anything lately. The glass is half full, not empty.
So at least tell us that the 4th Q will be gangbusters.
SXM….
The glass is half full based on what? This run up is typical, and the reaction to the call will be typical. Depending on the numbers tomorrow, the glass will become more full for Q3 and beyond. IMO
Yeah. Talk about a SiriusBuzzKill!!!! Since parting ways with Brandon, Tyler has gone mostly negative while Brandon is mostly positive. I try to find a balance between the two.
Tyler “Debbie Downer” Slavery
guys….
I have taken the time to speak to analysts as well as dealerships. Foot traffic was good when the program was in full force, but dropped off once speculation was announced that the program would be suspended. Dealerships were taking down lists of people to call if the program continued.
Car sales outside of cash for clunkers is slightly up, but the bulk is cash for clunkers traffic.
This article is dealing with the cash for clunkers aspect of car sales, and when subscribers from those sales will be a reality. The bulk of the benefit is a few months away, and once the backlog is sold off.
People are expecting wonderful things now…in tomorrows call. You need to think further ahead for a cash for clunkers benefit.
My statement is that there is benefit, but it is not as big as all of the talk.
Others carry this opinion
“Oh yes…I would like to weigh in on a bit of negativity I’m hearing regarding cash for clunkers…apparently, it seems to great of a concept to grasp the fact that just because there are X number of cars being sold under the CFC program, there are 3 X as many cars being sold as a result of nonqualified people coming in and buying a new car anyway..”.
Here are the REAL NUMBERS
June 2009 sales – 856,670
Total sales through June 2009 – 4,785,158
July 2009 sales – 994,002
Total Sales Through July – 5,779,111
A new article being worked on now.
Great. Now Cramer has officially started the Sirius Bashing again. Cramer should be BANNED from mentioning this stock. A year ago he was PUMPING it EVERYDAY on his show saying it’d go to $5 instantly if the merger was approved. Soon as the merger was approved, him and Goldman Sachs bashed it down to .05 cents.
He is a liar and a criminal.
Not to trash on you Tyler. You’re only being cautious. But you know what? I am tired of the bashing and the highlighting of only the bad.
I was torn with whose coverage of the CC tomorrow I was going to listen to, SiriusBuzz or Satwaves. I’ll probably bounce between the two. But I have to say…..the glass is half full right now, and I don’t want to dwell on the negative anymore. Us longs deserve a little enjoyment, and all this negativity be it guarded optimism or not…is just a drag right now.
why don’t you just listen to the CC yourself and make your own decisions. Not sure how you could listen to the call and these guys at the same time anyhow.
We may get a bounce back after falling from .59 to .52 today, so it should be interesting in the a.m. If I know Mel, it will be a good headline from Sirius regarding cash flow and the subs if bad will be hidden by showing the year over year increase of the 2nd Q #’s.
May be a pop and drop – my opinion.
Friggen….
You can be torn. My advise….Look to see who you feel has been the most accurate, concise, and detailed and pick that coverage.
This article gives the real picture of cash for clunkers. Do you dispute that? Should I stand up and cheer about 250,000 cars that were sold through the program, which at most will deliver 50k to 70 promotional subs?
As an investor you need to care about 2 things.
1. The perception
2. The reality
I can tell you already what the perception is, and can tell you the reality. Perception is dominating at the moment, and a mixed bag quarter, which is what we will have, means that a bad perception can continue.
When there is something to celebrate, I will celebrate it. When there is not something to celebrate, I am not going to pretend.
I am here to get you the information you need, not the information you want to hear.
Tyler – could you be wrong about how many subs lost, revenue, cash flow projections. They may beat estimates and it could be looked at as the worst behind. I’m just saying you are so adamant and may be correct, but that’s where surprises sometimes come from.
They may announce something with Direct TV, Howard Sterm, MLB, more details on GM deal, penetration rates improving.
$ is made when least expected or else stock would already be much higher, right ?
sxminvestor….
I do not want to sound arrogant, but I have been doing this for a long time. They will not beat estimates, in particular because the consensus estimates have ignored one time charges.
Announcements about direct tv, stern, mlb, etc. would be good, but they do not impact the numbers of this quarter. Those things would give potential future value.
$ are made when a company is on the right path across the board. Sirius XM is not at that point right now.
If I am off by a substantial margin on my metrics, I will be sood stunned. Good luck.
Personally i prefer the glass is half full approach. It makes positive surprises that much sweeter. In the meantime Tyler is providing us with a realistic outlook that tempers some people’s over enthusiasm for everything SXM.
Oops! That should have read i prefer “the glass is half empty approach” .
Tyler,
I appreciate all your hard work and points of view. The shareholders have waited along time and just want to get to the point where some positive news will help get this stock going in the right direction. I do not believe that sub numbers this quarter are important but more so the guidance going forward. That will be the catalyst that will move this higher or lower. The fact is that SIRI is not there yet but they are close to being on the right path. At what point of the path must they get to to move this stock higher? GLTA
Tyler,
Please don’t let those who criticize here slow you down. Its inevitable that you will be compared with Brandon and Satwaves. While I find their information valuable its much more speculative and lacks the journalistic integrity that yours has. I’m long on this stock and while I absolutely believe this stock will have its day, we need someone like you to keep balance. I hang on every word you write not because I’m looking for trading advice but because I’m looking for the research and substantiated opinions on the health and outlook of this company. Thanks again, outstanding article breaking down the cash for clunkers impact.
Tyler,
You probably are correct, but there are so many moving parts for calculating subs and metrics as you describe in the OEM equation and because it is so dynamic, they may really beat nicely on some. Retension may be better than expected. Subs will suck, but I’m hoping they found away to keep it at only 200k net loss with all the internet ads and clearing inventory with rebates, etc.
I know this is probaly the last questionable call and 3rd, 4th quarters are finally going to be much higher expectations.
Anyhow I think they just might surprise since most are kicking them in the ribs while they are down and Mel is out for revenge !
Hey Tyler,
I appreciate the factual, honest approach you bring to the table. It’s what shareholders in Sirius need. We SHOULD know better than anyone else not to get caught up in the hype, as we did before, only to have all hope crushed by the realities of the company and economy.
I come here first for real reporting. Then, I’ll be honest, I stop by Satwaves to see what kind of emotional outburst Brandon plays off as an article. And then I really cringe when I read the comments and see how people buy into his B.S. There was once talk on Satwaves about how the new Sirius iPhone app would bring in 30 million subsribers. Ha! Didn’t Brandon originally call for subscriber gains this quarter? Come on, folks. The speculation and opinions there are irresponsible. Futhermore, the conspiracy theories regarding the media remind me of the Birther movement. One more: I remember Brandon writing that Obama got his ideas for new financial regulations from Satwaves. I could go on and on…
Anyway, you know where I stand. And I’m sure others feel the same way…I hope. Otherwise, we’re living in the freakin Twilight Zone.
Lastly, FrigginRegan, you post comments like 65 times a day. I think you need to step back from this stock a bit for some perspective.
Thanks again, Tyler, for the good reporting. I’m not sure I would have survived this nightmare of a stock without it.
Until tomorrow folks,
Brad
The tide has finally turned for Sirius with massive car sales in the 3rd and 4th quarter to give them positive subs.
One time charges and 2nd Q #’s are history – we’re 40 days into the 3rd Q.
Markets look ahead.