Since the March 11, 2011 earthquake and tsunami in Japan, investors in several sectors have been monitoring the aftermath closely as it relates to specific industries. Investors in SiriusXM Radio (NASDAQ:SIRI) have been no different. The auto channel delivers the majority of satellite radio’s new customers and is a key component to the company’s continued growth.
We are seeing many auto makers reporting that the stoppages in production are easing and while production levels are not at full capacity, they are gaining consistency, which is good news for the industry. Mitsubishi announced that as of April 18th, their plants are running at “continuous operations” for the first time. Production will not be at 100%, but keeping plants open and staffed is the best way a company can begin to return to a normalized situation.
While Mitsubishi is a smaller manufacturer in the OEM arena, their public statements at a major auto show indicate that parts supplies, which has been the biggest obstacle in returning to normal production, is getting to a point where manufacturers of cars can predict the supply chain much better. Certainly there will still be issues surrounding parts and production, but for the most part, things seem well under control.
For satellite radio investors this news is quite positive. Consistent production combined with strong April auto sales should be enough to keep SIRI shares trading at decent levels.