Edmunds Lowers December Auto Expectations By over 40,000
Well, it seems that the past week did not do the auto sector any favors. Edmunds, which last week estimated December 2011 auto sales to be 1,273,000 units with a SAAR of 13.7 million has now adjusted sales guidance down to 1,230,000 with a SAAR of 13.4 million. The auto website pre-released this news as it became apparent that the pace of auto sales had slowed substantially and would carry a material difference in the overall sales for the month.
Should the 1,233,000 number come to fruition, it would mean that December would be the second best month of 2011, falling short of march sales which came in at 1,245,000. This would also bring a theoretical Q4 tally to 3,244,000, or 27,000 units less than Q2 sales number 3,271,000.
In my last article, “December Auto Sales Shaping Up For A Good Month – What It Means For Sirius XM” , I noted that while the sales were looking good for Sirius XM, and some of my concern was alleviated, there were still some challenges. Now with December looking to be 43,000 units lighter, it is time to revisit some of the calculations once again.
By now most regular readers should be familiar with the tree categories of subscribers Sirius XM gets from the auto channel. In my last article I covered that production in Q4 was looking to be softer than Q2 (Sirius XM’s best subscriber quarter this year) by about 14,000 units from the two biggest partners (Ford and Chrysler). That data remains the same. I also noted that the trailing category of subscribers was going to be softer by about 23,000. Neither the sales or production differences are so big that they would carry a meaningful difference.
The big difference came in the sales category, and this is where Edmunds trimming the forecast again carries a big impact. When the assumption for December auto sales was 1,273,000, the Q4 sales number in this category was going to be 164,000 units softer than Q2. Now with lower sales projected, that number could be even greater. The full impact of the 43,000 fewer sales will not fall into this category, but the number will appear to be worse, not better. A reasonable estimate is that the gap will now increase to 177,000 units, which as you can imagine is the crux of what will happen in Q4.
At this point it boils down to the final week of December. The negative is that both Christmas and new Years are on weekends this year. The positives are that the used car market deals should be contributing a bit more than last quarter.
The OEM channel data this Q4 will still present challenges to Sirius XM. The final numbers from the auto channel as well as Sirius XM will be interesting to see.
[via Edmunds]
ouch!!!!! they going to make #’s or not,what do u think spence/???
I currently have them between 430,000 and 470,000 or so. Right on the cusp. I have a lot more crunching to do still.
Spence,
As I recall the auto sales forecast is still about 100,000 above the number you had previously said was necessary for Sirius to hit their numbers (around 1.1 million), correct?
Anyway, if Sirius misses by a few thousand, its still 1.6 million. I think they’ll get a pass on hitting exactly 1.60000 million.
Also keep in mind that December tends to be a big month for the foreign luxury brands which tend to have a higher rate of Sirius installations – about the only ads on TV these days seem to be for luxury brands.
Anyway, Mel most likely will give us the news on Jan 4 — too hard to be the keynote speaker to a Citi conference where the analyst just said BUY Sirius, to not at least announce subs. And hard to believe Mel would even agree if he thought he was going to miss, at least within rounding.
Here is what I said….
– Stronger December sales that hit at least 1.15 million
– Reduce churn to a level near 1.75%
– Increase take rate to at least 45.5%
– Get the Lynx unit out in retail or at least promote the Edge unit
– Work on retention stronger than usual (could impact ARPU)
At 80,000 more than I stated, they can be a little higher in churn, and take a bit of a break on steep discounting
Thanks.
Spencer, OK, big guy, you have few more days of crunching before the final tally.
I’m hoping you will shed some light on all the moving metrics that need to meet expectations and not just meet or beat the 440,000
Knowing that this is your area of expertise, your readers are counting on you to beat Mel to it before the 4th…. Just in case he decided to drop an early nugget.
Robert,
Not always an easy task. Mel has the real data and I have to work with some assumptions.
– The company seems to be pretty aggressive this promotions to try to win people back with prices like $25 for 6 months. That promotion used to be $25 for 5 months. The question is whether they were not getting enough reactivations at the old so they sweetened the pot a bit, or if they simply wanted people on board for that added month.
– Another wild card is how aggressive they are with those that are trying to cancel. Is it more or less than normal?
– There is still one week of auto sales to figure in, and we wont be seeing those results until January 3rd and 4th. Production is mostly known at this point. The trailing category is known. It is the sales category that presents the challenges
– the newer used car deals with GM and Nissan are also a bit of a moving target. I gave this segment too much credit last quarter. Do I adjust down, or do I stick with the same assumptions? These are trailing subs, and the programs are somewhat new, but they now have had 6 months to get ramped up (in the case of GM).
– Retail sales are another wild card.
I am doing my best to try to measure everything, but it takes time, thought, and good assumptions
Spencer… Do you think Jan 04th CITI date that Mel is speaking at is significant? Could he announce that SIRI met 2011 guidance with 442k subs? What’s your take on things? read an earlier post where you said SIRI will bring in between 430k-470k in Dec. That means you now think they will meet guidance?