Sirius XM’s 60% Penetration Rate Outpaces Weak Auto Sales
Investors in satellite radio are well aware of the importance of new car sales to the growth of the subscriber base. With weak auto sales reported for February 2010, some may think the outlook for satellite radio is dimming. The fact of the matter is that the company is maintaining or above the pace of last year, and still in line with their guidance.
The reason less worry is warranted is because the company is now being installed in 60% of all new cars manufactured. Last year at this time the penetration rate was barely over 50%. On top of this, Sirius XM is being smarter about which cars it is being installed in. In the midst of the gain in penetration, Sirius XM has improved the take rate. The number of customers electing to become self paying subscribers is growing.
Yes, Sirius XM could use the boost provided by much higher car sales, but the key take-away for the short term is that they based guidance on annualized auto sales of 10,000,000 units and currently the auto sector is on or above that pace. It is the auto sector that will deliver the 500,000 net subscriber gain Sirius XM guided to in their last call.
Phil “the shill” Lebeau is projecting 2010 run-rate of 10.4mm to 10.8mm based on sales data released today (3/2) . . . luxury CPO additions remain a wildcard
CPO programs will not put in big numbers til this time next year.
Spencer – Do you believe that used car subs have the potential to eventually outpace new cars subs on annual basis?
I believe this is inevitable. 10-16 million new cars sales each year. Used car sales probably 2 to 3 times that amount each year. 240 million cars on the road.
There needs to be a separation between the used car market and the CPO programs. The CPO programs guarantee exposure to satellite via a trial period. The used car market, for the most part, does not.
Over time, the CPO programs will demonstrate their impact. It is a year away for meaningful numbers.
I disagree. The factory installed radios are going to be penetrating used cars, not just the CPO portion of used cars.
The penetration rate on used cars will lag the new car penetration by some amount of years but eventually there will be between 60-70% of used cars sold just like new cars sold.
There are 240 million cars on the road. 10-16 million new cars sold each year. Double or triple that number of used cars sold each year.
There is absolutely no way Sirius doesn’t try to sell sat radio to all used car buyers that have factory installed radios – CPO programs or not.
How can anyone project the run-rate for all of 2010 based on the first two months of the year? One would think that rate is dependent on many variables that are subject to changing economic conditions, not to mention some of the new incentives being offered by Toyota, GM etc. such as 60 month no interest loans.
Too little , too late for the last 10-day run to compliance……………….back to filing extensions and praying. Also with ‘friends’ the likes of Wunderdik and S & P’s Tuna Fish reiterating over and over again to ‘hold’…………….we still have a substantial uphill battle ahead it appears……….
Don’t be so hard on the big Tuna, he sees the stock going to a $1.50 (the hold is a puzzle) compared to Wunderboy’s .25 s/p. His negative opinion and the timing makes me wonder about Wunderboys agenda! He paused the party.
CORRECT…………………..and how come someone who ’see’s’ that, and has a $1.50 pps target, couldn’t on MONDAY change his opinion to BUY, as opposed to when we NEEDED it least of all ‘reiterate’ a HOLD !!
They are all in bed together, the stock is probably one of the biggest retail-investor owned, and the large wholesale institution$ constantly and daily, maraud our investment$ to feed their own !!
It was my understanding that their projection was based on 11.3M although I may be wrong. Still, the 60% penetration combined with “smart” installation in vehicles with a higher take rate will undoubtedly work. On top of that, luxury brand sales are singficanlty higher than last February, and the take rate their is most likely over 75%. It would also be great to get some metrics for the OEM market and its growth. It appears that Mel and Co gave up on retail market and will be shifting their focus to OEM. This market should be growing in the future considerably. In my opinion, siri’s positive results in 2010 will deal a huge blow to their critics, and I an sure that Mel realizes this. This quarter and consequently this year should be a breaker.
BaBa, you sick today? Or do you only come out to play when the SIRI price drops? I did not know what to do without your real time stock quotes. SIRI ended the day at $0.95 (up .06).
Stuart
Blah..Blah is out sick today…doesn’t know if he wants to throw up or crap his pants!!!!! So, I’ll take over for him…sell…sell…sell…Siri going BK…sell…sell…sell…Siri getting delisted…sell…sell…sell…Siri…going to R/S…sell…sell…sell…What…Siri up .06 today…Finished green two days in a row…uh…um…Mel sucks…Mel sucks…sell anyway…blah…blah…blah
now that right there is funny….
Zzzzzzzzzzzzzzzzzzz
I believe Siruis XMs projected sub growth of 500,000 units was based on a SAAR of around 11 million, rather than 10 million. I believe the 1st couple of months this year are a little under 10.5 million.
Also, take into account that Ford said that 40% of their sales were with fleets/rentals in Feb. Great news for the economy in general, but probably not too many paying subs in those fleets sales.
Combined with the normal higher churn in the 1st Q, we probably should not expect too much growth for subs in the 1st Q. The rest of the year should be much better assuming the SAAR picks up later in the year.