March 2008 Auto Sales And SDARS Relationships
This edition of the Auto Sales And SDARS Relationships report has some updated data that sector watchers may find useful. We now include estimates for penetration rates (installation of SDARS receivers) broken down by brand as well as an estimated number of installations in the OEM channel on a year to date basis. In particular, with the first quarter just coming to a close, we felt that this data may be helpful in estimating subscribers. We caution that the installation data is a very rough picture of the situation. Penetration rates are based on production, and this data is based on sales. Please refer to note (3) on the chart below for additional information that is important when considering this data.
In March 2008, only seven of the thirty-five major auto makers saw positive year over year results. Sales are down virtually accross the board, and with the exception of MINI (over a 25% gain), those that saw positive results did so in a very modest way. In the first quarter of 2008, there have been 3,598,448 vehicles sold. This represents a drop of almost 7% from the 3,858,159 vehicles sold through March of 2007. For some perspective, sales through March of 2006 were 3,934,883. For satellite radio sector watchers, the good news is that installations are ramping up on a percentage basis in numbers that more than offset the decline in auto sales. This means that the OEM channel can and will still see growth.
Position – Long Sirius, Long XM, No Position OEM’s
Should anyone have a suggestion on a differing installation rate for a particular brand, please feel free to post it here.
Tyler
Tyler, to go along with Buick, Hummer and Saab — both Cadillac and Hyundai are now 100%. Cadillac was actually the first for XM to be implemented awhile ago. Furthermore, you can no longer build a Hyundai without XM… it is now standard across the board an all models and trims.
http://www.autoblog.com/2007/1.....08-hummer/
Plus, keep in mind that installation numbers jumped big for XM in Q4 last year. With vehicles “in the channel” taking 30-90 days on average to sell — XM said that they had approximately 900k vehicles on the lots waiting to be sold at the end of Q3. Those vehicles were largely sold during Q4. The number “in the channel” jumped big time to 1.255 million at the end of Q4. It is that pool of 1.255 million that would be sold during Q1. That figure was given on XM’s conference call.
Granted sales were down big, but there was a high penetration of vehicles to begin with. I believe that 843k in sales for XM is on the low end. I expect it to have topped 900k — and that’s even a conservative figure given XM’s announcement of 1.255 million in the channel already.
To complicate the installation conversion to subscriber numbers though, is that a good amount of them will not be counted in the sub count — due to XM’s change in accounting on those new promo subs. Installations for Nissan, Infinity, Toyota, Lexus, Hyundai and som eothers will not be counted into the sub-count until 30-90 days later. But that’s a whole-nother topic.
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Homer,
I thought Cadillac was, but was unsure, and it was getting late. I knew Hyundai was going to be a 100% company, but did not think thet had ramped to it quite yet. I will adjust the chart accordingly.
Thank you for the input.
For example, a Nissan manufactured in Q3 2007 — on average is sold 30-90 days later (during Q4). But then not counted until after the promo period — which pushes it out another 90-120 days. So a Nissan manufactured in September, may not be actually counted as a sub until as late as April — provided the buyer takes up the service.
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I put together a complicated and conservative spreadsheet on XM and Sirius additions for 2008 — taking into consideration all of those complications (and others).
I have XM with 820K Gross OEM additions, which already factors in a 50% take on the “non-counted” OEM promos sold during Q4. This 820K figure is based on previously announced GM/Honda installs of 3.2 million for the year (amortized and estimated for Q1), combined with the “50% take-rate” of the non-counted promo’s sold during Q4. This is actually a conservative estimate, considering already announced numbers already in the channel at the end of Q3 (non-counted promos) and Q4 (GM and Honda).
As a side note… the non-counted OEM’s will contribute approximately 1 million installs in 2008, but this is complicated by the delay in when they are actually counted and the 50% take-rate. (XM’s OEM’s will manufacture approximately 4.2 million during 2008, quite a bit more than Sirius’ OEM’s, which I have below.)
I then have XM with 248K Gross Retail additions, which factors in a 25% cut from Q1 2007 additions.
This gave me a total Gross of 1.068 million for the quarter.
I then factored in a 2.6% monthly churn rate against the base — and was left with 353K NET additions for the quarter.
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For Sirius, I estimated 764K Gross additions at OEM; which is an amortized figure based on my estimate of 3.5 million OEM installs for Sirius in 2008.
I then factored in 322K Gross additions at Retail, which includes a 20% cut from Q1 last year. This also gave Sirius a 56.5% market share at retail activations — which is consistant with what they achieved throughout 2007.
These figures gave me a total Gross of 1.086 million in the quarter for Sirius.
I then factored in a 2.3% monthly churn rate against the base — and was left with 499K NET additions.
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Homer….
Your retail channel numbers for both seems pretty realistic.
OEM is quite tricky, as you state. It makes it difficult to extrapolate, but you are going down the right path.
On Sirius, I would use a 2.4% churn rate or even a 2.45% rate for Q1 instead of 2.3%
Tyler, I attempted to “build” a Hyundai without XM in it on their website, you really cannot do it. There were 4 trim packages of the Tucson remaining to be added — and they began rolling during Q1.
I think there is one or two trim packages in the Entourage left as well, but those make up a very small number in the grand scheme of their sales… they’re supposed to convert by the end of the Model Year too.
I mean, I suppose you can err on the side of caution and go with 90% or 95% penetration. But my estimations of trim packages with standard — it comes to 93%.
Homer, where do you come up with your final figures. Even if I use yours 2.6 monthly churn on 9 million is 702,000 for the quarter. Take that number from your 1.068 million and you get 366,000 net. On the SIRI end 2.3 monthly churn on 8.3 million is 572,700 for the quarter. Take that number from your 1.086 million and you get 514,000 net subscribers. Now unless you are trying to estimate the churn on new subscribers for each month of the fist quarter. It would be appreciated, if you would clarify this.
The numbers are small but all Infinitis now have XM standard. You cannot get an Infinti without XM at this point.
>>>Now unless you are trying to estimate the churn on new subscribers for each month of the fist quarter.
That’s pretty much it right there John… you’re basing churn numbers on just the ending sub count for Q4 2007. I’m basing my churn numbers on a monthly base number. The base goes up each month — so theoretically the churnout numbers should go up too. That’s the sub difference for XM, between the 366K you estimated and 353K that I estimated.
Same goes for Sirius. If I based the sub base on Q4 only, then I too would come up with 514K, as opposed to the 499K that I did come up with.
Coming up with the exact extrapolation for each month of the year — is really guesswork. But as long as you’re close, that’s all that matters… because your base will at least be closer than using the prior quarters ending figure for estimating the churnout.
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I thought so, thanks for clarification homer. I wasn’t sure though because you said base subcriber numbers, and I took that to mean the known numbers from last quarterly statements. thanks again.