The headlines came out toady, but the news was not unexpected. The troubles at Chrysler and GM have been known for quite some time, and dealership closings were inevitable. The impact of these closings will be wide reaching both economically, as well in the psychology of the consumer.

Consumers sometimes become as loyal to a dealership as they do to a car brand. A good dealer gets repeat sale after repeat sale. If that dealership offers good service, they get continued business. In the near future it is possible that 789 Chrysler dealerships will close if the court approves. From the GM standpoint, it has already been announced that 1,100 dealerships. If these dealerships close, consumers will find themselves shopping, and perhaps will shift to other brands.

According to Chrysler, half of their dealerships accounted for 90% of their sales. If true, these metrics virtually demand that closings happen. The American car companies have had many challenges in trying to compete with imports. Huge costs and and a perceived lower quality have riddled the big three for years. With a slumping economy, the issue has simply come to a where substantial change needed to happen.

The big benefactors of Chrysler and GM's woes will likely be Ford, and Toyota. For satellite radio, this presents a small problem. While Toyota had announced that they are installing 4 times as many satellite radios this year, the number left off of the table was what they installed last year. That number was smaller than many think, and the bulk of those will not happen until the 2010 model year begins. Additionally, as dealerships close, the inventory will need to be shifted creating a more confused situation, and perhaps causing yet more production cuts or delays.

All of this is important to note that because the OEM picture is so critical to Sirius XM. It also puts a greater importance on what Sirius XM do outside the OEM channel. The Sirius XM iPhone application, and other marketing can help fill the void (to a small extent), but only if they are properly marketed.

Long term, the dealership network will be leaner, but the consistency of the brands will be easier to maintain. This should help GM and Chrysler right the ship if sales pick up soon, and a year from now we will have a decent picture of the OEM landscape that is not scattered with asterisks.

Position - Long Sirius XM, No Position OEM's