As expected, March auto sales in the U.S. were higher than February, but not quite as high as some analysts expected. The news should be well received by investors, because the numbers are showing improvement on a year over year basis. While we are not seeing the booming numbers of years ago, the slow but steady growth shows at least some stability.
March saw auto sales of a bit over 1,000,000 units, a key number that I have mentioned many times as the point at which the Sirius XM sub base can show growth at a level which can generate some excitement in satellite radio. While eclipsing the 1,000,000 is great, it was bolstered by some impressive incentives offered by most brands. The incentives do boost sales, but auto manufacturers can not maintain such incentives over long periods of time.
The key here is that the auto channel is showing that perhaps the bottom happened in 2009. This year the auto channel has sold about 2,545,791 vehicles, 16% better than the 2,204,175 sold through March in 2009. That type of growth is what the auto channel as well as Sirius XM needs. The satellite radio installation is about 10 points better this year than last. Thus, we would already see growth over last year even if car sales were the same. Seeing growth in the car sales arena compounds how it impacts satellite radio.
Will April demonstrate the same type of growth? Only time will tell, but the sales figures in late March would tend to indicate that April will soften from March, but still shows potential for growth over April of 2009. 1,000,000 units in April will be a challenge, but if the number shows growth and approaches 1,000,000, investors can have a bit more confidence in the OEM channel.
Position - Long Sirius XM