2014 Starts Off With Slower Auto Sales
Auto sales are important to SiriusXM because they are the primary source of subscribers. About 70% of cars sold in the United States are equipped with a satellite radio installed. Most of these vehicles come with a free trial ranging from 3 months to a year. Last quarter SiriusXM was successful in converting about 42% of the trial subscriptions into self paying subscriptions.
For SiriusXM the importance of auto sales goes even deeper. Which manufacturers are selling cars carries a direct impact in when, if, or how a subscriber is counted. Members of SiriusBuzz Premium get a monthly breakdown by manufacturer and category. Some manufactures supply counted subscribers at the point the car is manufactured. Others supply a counted subscriber when a car is sold. Still others do not supply a counted subscriber at all unless the consumer is converted to self paying. Understanding these dynamics can help an investor assess the subscriber numbers and give you an advantage as the quarters come and go.
This month regular readers will get a little insight usually reserved for SiriusBuzz Premium members. Brands that supply subscribers at the time of manufacture accounted for 39% of the market in January. Brands that supply counted subscribers at the time of sale accounted for 13% of the market. Brands that only count if a conversion is made have the remaining 48% of the market.
In summary, sales are off last years pace by about 3%. February is usually a strong month, so there is plenty of room to recover. Last year February auto sales were just shy of 1.2 million. Sector watcher will be paying close attention in the next few weeks to assess whether this slow down is weather related or there is a deeper issue on the table. Stay Tuned.
the way the news reported it, it sounded like they missed estimates by 100s of thousands.
they only missed last year by 31k. considering the millions of people in the country, and the millions stuck in their homes due to the eastern US weather, 31k is not much of a drama to react over.
Spencer,
It is the weather and you know it. Why be so cautious? This reminds me if the CNBC hysterics. February will make up for Janaury losses. The demand is pent up and only nature can mess up the sales. If February weather is going to be in the way of auto sales then March will catch up. The industry will exceed 16M sales this year. There is zero reason to believe otherwise.
Concerning siri, I always recall your words that once there is at least 1M auto sales in a month the company would do well. I am reminding you your own words. 2014 for siri will be an amazing year, very desirably on its own.
sirifair….The weather has an impact, but the level of incentive spending by OEM’s has been increasing month after month for 4 months now. Give me a little credit for following the sector and monitoring such things. Incentive spending is usually a sign of softening demand.
The projected pace for this year is 16 million, up slightly from 2013. This start is a bit soft. Yes, the weather is part of that, but just 6 months ago 2014 sales were projected at 16.5 million. The projections have been softening for a few months now.
There was a time when 1 million meant SIRI will do well…that was 2 years ago. In 2013 the number was 1.1 million and I wrote to that effect several times. Why does the number rise? Because churn will take away more. This year will likely be in the 1.1 neighborhood. I still have more analysis to do on the GM deal. That throws a whole new dynamic into the mix.
Please, try to think objectively and with less emotion.
By the way Sirifair…
The generous tax benefit for business vehicles that brought on more healthy fleet sales expired with the new year as well.