The headline today was that GM's August sales were up 5%, but that is not the information that XM investors should be excited about. The more relevant information is specifically which vehicles led to the 5% jump in sales. It was GM's truck and light truck segment that led the way, and for investors, that is welcomed news.
It is hardly a secret that the truck and SUV segment of autos is where the most satellite radio installations happen. This has been the case for years, and the trend continues to this day. One only needs to tour a new car lot and scope out antennas to know this.
GM's truck sales were up 14.9% and light trucks were up 16.5%, and among those types of vehicles, satellite radio installations are the most concentrated. The August numbers, percentage wise, were a stark improvement from July when truck sales were down 15.6% and light truck numbers were down 16.4%. This august more than made up for it because the raw number comparisons were much healthier. In July the truck and light truck category accounted for 397,073. That number rose to 484,665 sales in August.
This news likely brings the GM subscriber contribution back to a more reasonable pace that can meet expectations. The additional good news, at least for Q3 is that GM still has a large inventory of vehicles. As of September 1st, the inventory was at 945,000 vehicles. In the short term, this means that sales promotions that brought buyers in will likely continue at least through the end of the third quarter, meaning that September can provide a welcomed boost of XM equipped cars being sold.
Position - Long XM