March Auto Sales Show Upswing On Incentives
The auto sector showed a little life in March with the help of incentives. For the month auto sales were 1,533,520. This beat March of last year by about 80,000 units and even allowed Q1 of 2014 to better Q1 of the previous year. Q1 2014 was about 48,000 units better than Q1 of the previous year. Essentially this would present about the same number of subscribers if the metrics were now counted the same. However, with the restructuring of how radios in GM vehicles are counted, the sub number in Q1 of 2014 should be less than we saw in 2013.
In Q1 of 2013 the company added 452,890 net subscribers with the old GM deal. Now, GM sales are not counted as subscribers. GM sold about 650,000 cars in Q1. In the old deal every GM car equipped with satellite radio would have been counted as a subscriber. In the new deal, they are not. If we assume 70% installation, the gross additions would have had a benefit of 455,000 additions this quarter. That does not exist. Instead, what we will see from GM is the self pay conversions of last quarter. That number will be about 200,000. The delta here is about 255,000 units on a gross basis. Bear this in mind.
For some perspective:
- Q4 of 2012 saw subscribers additions at 535,000 on auto sales of 3,588,000 for the quarter
- Q4 of 2013 saw subscribers go negative at (23,000) on auto sales of 3,800,000 for the quarter
We should not expect subscribers in Q1 to be anywhere near where they were last year. GM is the largest seller of cars and the largest installer of satellite radios. You do not see a deal like this change without feeling the impact. The good news is that this deal helps SiriusXM out on the back end with lower revenue sharing. The bad news is that it will take time for the street to adjust to this. Additional details will be covered on SiriusBuzz Premium.
With auto sales we want to monitor incentive spending to see how strong the market will be. Stay Tuned!
March sales turned out a little bit better than expected by about 45K. The whole Q1 sales are also slihgtly more than last year. So, what are your sub number expectations? Are they going to exceed 400K or not. My take is that they should be somewhere not too far from that. To me, any number over 400K would be a very strong result.
I am less concerned about other metrics because their expenses will be the smallest in five years on a relative basis with reasonable debt service expense and infrastructure expenditures with no sat build or launch costs. SAC may approach $40. Hopefully, ARPU exceeds $12.50 although I do not know how Piolin subs may affect the ARPU because they are a first.
To conclude, Q1 will come with a lot of “firsts” from no sat launch and build costs to no refinance costs to much smaller ineterest on debt to Agero revenue, etc. I am very curious what will come out. I expect
Sirifair6-
I know you are addressing your comment to Spencer but I really need to chime in here. Your expectations of 400k subs may be a bit too rosey in my opinion. Keep in mind 2014 guidance is 1.25m. I would expect the numbers to be closer to 275-300k. If we assume that we will see roughly the same each quarter, that would get you the 1.25m. Then if we assume Q2 is a bit better because of more auto sales during the summer months, that’s how we get the guidance beat to near 1.3m+ for the year.
I would NOT expect 400k subs, or anything close, because if that pace continued it would be a sub beat from last year. (400mx4 = 1.6m). Especially with the GM deal, I can’t imagine anything close to that being in the cards.
For this first quarter, I think we are lucky to see 300k, and I think we are ecstatic to see 325k. If we see anything more than that I think it is time to break out the champagne bottles…
sxm,
To make sure we are talking about the same thing I mean close to 400K SELF PAY SUBS. The net sub number may be not very attractive.
I would agree that anything better than 300K self pay subs would be a very solid result. Still, for now I am still sticking to the number close to 400K self pay subs. Siri has virtually always under guided and over delivered.
I agree, they over delivered their numbers since last few years. They may announce a hefty dividend or share buyback during this CC. They may also announce an international service. Its about time for SIRI to go up in share price.
When are we getting additional details at SB Premium?
Denco….
Shoot! I do owe you guys that. I had a death in the family early this month and got off track for a bit with flying, funerals, etc. I will work on that this weekend.