Satellite Radio growth rests with gaining new subscribers. Gaining new subscribers is tied directly to the automobile (OEM) channel. It is through new cars that Sirius XM exposes consumers to their service. Roughly 60% of new cars sold are equipped with either Sirius or XM.
Edmunds has come out with a preliminary forecast for May auto sales and is expecting a SAAR rate of about 11.4 million. Just a few days ago the forecast was 11.2 million. This number is not as high as the peak in March, but should deliver car sales that are about 1 million for May. That 1 million in sales is the magic number for satellite radio that virtually guarantees positive subscribers for the month of May.
Earlier this month I had projected that May auto sales would fall in just below April. The newly released Edmunds data is actually giving indication that May could outperform April. Jessica Caldwell of Edmunds does note however that getting above the April number will rest on the shoulders of strong sales on the holiday weekend at the end of the month. Either way, sales will be in the zone that is positive for satellite radio. Increased production will also help push the promotional subscriptions higher.
Position - Long Sirius XM Radio