Edmunds Auto Observer has come out with their estimates for for July 2011 auto sales and the numbers are great news for Satellite radio investors. The key figure SIRI investors need to look for is that over 1 million cars sell each month. The secondary number SIRI investors want to see is that Seasonally Adjusted Annualized Rate (SAAR) is moving in the proper direction. For June we saw over 1 million cars sell and a SAAR rate near 11 million. July brings us over 1 million once again and a SAAR that should be in the neighborhood of 12.4 million.
What does all of this mean? It means that auto sales are continuing to come in at numbers that are good for Sirius XM's business model. One challenge the company has is delivering enough gross subscriber additions to offset the deactivations . The magic 1 million number allows this to happen.
What this also means is that the third quarter is is starting off at the proper pace and the SAAR is showing signs that there is still some life in the auto sector recovery. Sirius XM will report Q2 tomorrow. Part of that report will likely include some new subscriber guidance. Following auto sales is perhaps the best way to grasp how well Sirius XM is doing at garnering subscribers.
Position - Long Sirius XM Radio