cars_snow_5_1393423665So far 2014 has not been too impressive when it comes to growth in the auto sector.  In fact, we are just two months into the year and thus far both have come up short when it comes to auto sales vs. the respective months in 2013.  Yes, it has been a tough winter.  Yes, selling days may differ.  Yes, we could not expect growth forever.  However, 2014 was anticipated to be another growth year for the auto sector, with peak sales coming in 2015 or 2016.

For satellite radio investors, we saw SiriusXM already offer subscriber guidance that was lighter than last year, so a slower pace in auto sales is not very helpful.  While the raw numbers are enough to demonstrate positive subscriber numbers, the growth that we hope to see this year is going to have to come from higher prices, more efficient business, cost cutting, additional penetration, and a strong contribution from the used car market.  The all important auto sales growth that SiriusXM investors have grown to love over the last couple of years is drying up.

No, it is not doom and gloom.  It is however something to monitor and keep track of.  In 2013 there were 15.5 million cars sold.  The hope was to see 2014 bring in sales of 16 million or more.  So far, this year auto sales stand at 2,199,613.  That is about 33,000 less than January and February of last year.

One key element of auto sales is the mix of cars being sold.  Some manufactures are counted as subscribers at production, some at the time of sale, and some only after a free trial and if the consumer keeps the service.  SiriusBuzz Premium members get this breakdown in detail.  It can give a clue as to how the subscriber number will look in the current quarter as well as the quarters ahead.

Another interesting tidbit to think about is that last quarter installation rate increased slightly with an offset of a lower conversion rate.  This is something that we will want to monitor.  Installations above 70% do not really make sense because many people simply do not want satellite radio.  What we want to see is the conversion rate come back up.  SiriusXM has raised prices, so it will be interesting to see the conversion metrics in the quarters ahead.

If you would like to see how the sales broke down, and assess what the mix means to your investment, consider giving SiriusBuzz Premium a try.  A February car sales article will be published there this evening.