March auto sales are in and we saw Ford overtake GM for the first time in over a decade. The shift was notable because there seemed to be no particular reasoning behind it... it simply happened. Ford sold 56,000 more units than in February while GM sold about 400 fewer cars on a month over month basis.

For satellite radio investors, following the auto sector is of extreme importance. Sirius XM garners most of their new subscribers from promotional trials that come with the purchase of a new car. There are several factors to consider when looking into the auto sector as it relates to satellite radio. First and foremost is when the subscription is counted and for how long. Second are costs associated with the installations and revenue sharing with OEM's.

Ford cars that are satellite equipped typically come with a 6 month promotional subscription. This is twice the amount of time a GM car comes with. Ford promotional subscriptions are counted from the time of production while GM susbs are counted at the time of sale. Below is a breakdown of Ford vs. GM:


  1. A Car gets produced April 1st. - Sirius XM pays Ford a subsidy to install a Satellite Radio
  2. Ford Pays Sirius XM for a 6 month promotional subscription. - The subscriber is now counted in Sirius XM's numbers.
  3. The car sits on a dealer lot for 60 days. Fords payment sits in deferred revenue for Sirius XM
  4. The car is sold and the consumer begins a 6 month promotional trial. Money begins to shift from deferred revenue to revenue.
  5. The six month promotional trial ends. All monies have now been shifted from deferred revenue to revenue. Sirius XM keeps radio active for an additional month while they market to the consumer to keep the service.

With Ford we can reasonably anticipate that a subscriber is counted for 9 months. 2 months from production to sale, 6 months after sale, and another month for marketing purposes.


  1. Sirius XM pays a subsidy for the installation of a satellite radio.
  2. A satellite radio equipped vehicle is manufactured
  3. The car sits in inventory or on a dealer lot for 2 months.
  4. The car is sold and the 3 month subscription begins.
  5. After 3 months the company keeps radio active for 30 days to market to the consumer.

With GM cars we can reasonably expect that the subscription will be counted for 4 months. 3 months for the promotional trial and 30 days to attempt to convert the consumer to self paying.

As you can see there are distinct differences in how long differing manufacturers contribute to Sirius XM's subscriber numbers. There are also differing impacts on the metrics reported by Sirius XM. The methodology used with Ford and GM respectively offer certain advantages as well as disadvantages:


  1. Longer promotional period - 6 months vs. 3 months
  2. Counted as a subscriber longer - 9 months vs. 4 months
  3. Cash Flow Friendly - Sirius pays Ford a subsidy, but gets money back quickly when Ford produces a car and buys a 6 month subscription.


  1. Money received from Ford gets booked into deferred revenue, a liability on the balance sheet.
  2. Production is harder for investors to track and quantify than sales. Investors tend to look at sales and translate high sales into a benefit for SIRI when in actuality it is production that matters. Ford's blowout sales figures for March were long ago counted as subscriber.
  3. Average Revenue Per Unit (ARPU) is negatively impacted while the car sits on a dealer lot


  1. GM tends to sell a lot of cars.
  2. Sales are easy to quantify and track and reactions to sales are appropriate.
  3. GM has been a strong marketing partner


  1. Subscription is counted for less time
  2. Company recovers less of their investment on radios if the consumer does not become self paying.

The Ford methodology advantages would seem to outweigh the disadvantages, and the impact is seen faster than with GM vehicles. If the shift in auto sales stays in place Sirius XM could see some shifts in their metrics over the next 6 months. With high sales figures, Ford will need to produce more vehicles. Because the company recovers more money faster with a Ford satellite radio than with a GM, and because the subscriptions with Ford are more than twice as long, we will see positive impacts on many metrics.

SiriusBuzz offers a unique perspective on the auto sector. We track the auto sector with the additional categories of how subscribers are counted. These categories are "Leading", "Point-of-Sale", and "Trailing". Readers can refer to our March auto sales article to see which manufacturers contribute in which category. Ford fits into the "Leading" category. There are several other manufacturers in this category as well. In March we saw an interesting shift in this category. Roughly 38% of the vehicles sold in March were in the "Leading" category. This is a strong shift up from the 34% that the category typically contributes. That 4% shift means that there are more satellite radios being counted as subscriptions faster, and for longer periods of time (Chrysler is in this category and offers 1 year promotional subscriptions).

The bottom line is that Ford's performance will impact the SIRI metrics people watch in a positive manner, and perhaps will even beat estimates that many assume. This 4% shift is enough that analysts will want to revisit their subscriber, ARPU, and churn calculations in their models.

Position - Long Sirius XM Radio