In 2013 15.5 million cars sold. Analysts expect 16 million in 2014. So far, we are not off to a good start. Both January and February are posting sales figures that were lower than these respective months in 2013. We have had very bad weather to contend with, so there is some reasoning here, but time does march on.
The auto sales sector as it relates to SiriusXM is divided into three categories. The Leading category are cars with satellite radio that are counted at the time the car is made. The point-of-sale category are satellite radio equipped cars that are counted when a car is sold to the consumer. The last category is the trailing category. These are satellite radio equipped cars that are only counted as subscribers after the free trial AND IF the consumer elects to keep the service. The biggest change is that GM used to be in the point of sale category, but now is in the trailing category.
What we can note in the mix of sales is that the bulk of them are in the trailing category. In this mix, every single satellite radio equipped car in the leading and point of sale categories are counted as subscribers for at least 3 months. In the trailing category we can count on about 42% of the satellite radio equipped cars being counted AFTER the trial period (but not all like in the other two categories).
Last year the biggest category was the leading category. This year, the biggest category is and will continue to be the trailing category. What that means is a lower subscriber number this year...Thus, the lower guidance. What we need to see is sales pick up in March. If March does not show good progress, analysts will begin to assess their models.