SiriusBuzz Introduces Used Car And CPO Weekly Series
Now, with most CPO programs in the system for a year or more, the used car segment will become a more distinct contributor to the subscriber numbers. Simply stated, it takes time for the channel to ramp up to a level where meaningful results are tangible. That time is starting now, and it is for this reason that SiriusBuzz is committed to covering the channel on a daily basis and implementing a weekly scorecard so that you the reader have a quality source supported by real data.
In developing this series there are many potential sources that exist. I have chosen to utilize CarMax and Vehix. Other sites dealerships, sites and services exist, but it is important to avoid duplication. I chose CarMax as representative of a national used car dealership that readers are familiar with. Because of the size of CarMax, their information tends to be updated regularly, and input in a consistent manner. CarMax also has a deal with Sirius XM, so it is a source that has been vetted by the company in many ways.
I chose Vehix.com because they cover the entire country, are familiar to consumers as well as dealers, and are dedicated to connecting consumers with dealers. This means that their information gets updated regularly, and that hundreds if not thousands of dealers participate. This enables us to garner confidence in the pool of vehicles because it represents various aspects of the country.
The SiriusBuzz Used Car And CPO Scorecard is by no means scientific data. It is instead a collection of data that has been refined to determine the possible size, scope, and penetration of satellite radio in the used car and CPO channel. We will present the data with some options for conversion that will allow you the reader to better understand the contribution this these channels make to satellite radio’s subscriber pool.
At some point Sirius XM will begin to market to the used car market and idles radio’s. We will know that the used car and CPO programs are substantial enough of a contributor when this happens. By following our series of weekly articles tracking the data, readers will be ahead of the curve.
The SiriusBuzz Used Car And CPO Scorecard will be published each Tuesday exclusively on SiriusBuzz.com. We look forward to hearing your input, and are proud deliver this additional insight for readers.
Position – Long Sirius XM Radio
Spencer,
Thank you. This is what I expected in terms of accuracy. At the same time, we will see the trend, and data will get more and more accurate only with time. These two segments definitely deserve seriuos attention because at some point they will become meaningful and very profitable for siri. My take is that such meaningfulness is primarily a function of improved economy that is alreday getting better although slower than we would like.
Thank you Spencer Finally, somewhere to get some data on how this important segment is and will be impacting SXM’s future. Your methodology seems sound; esp., as somewhere to start. I look forward to your weekly scorecard and commend you for stepping forward to taking on this important analysis!
Shaking my head. What in the world does used car penetration mean if we don’t have a conversion rate for used cars? Hoping Sirius starts to give us those numbers on the used cars CPO’s next year.
Everybody knows that used cars are increasing penettation each and every month. That is more than obvious and of no help whatsoever. The CONVERSION RATE is all that matters.
It is going to be much harder converting used cars than it is new cars simply because the owners have less expendable income. The way Sirius attempts the conversion is of SERIOUS INTEREST! No pun intended.
We do not have the conversion rate, but in we also do not have the size and scope of the market. With this data we will have more of the puzzle than we have in the past. the point is to have the background data now so that we can better understand the sector.
The conversion rate matters only if the number of conversions ads to the bottom line in a meaningful way converting 10% of 1,000 satellite radio equipped cars only gives us 100 new subscribers. Having the conversion rate is meaningless. Now, if we know that there are 500,000 used cars that are equipped and assign some reasonable conversion rates, we have meaningful information.
This scorecard will go into not only numbers, but the market pulse as well. Who is buying used cars? how old is the average used car? What is driving the CPO market. Understanding these can help investors understand when, why, and how Sirius XM attacks this market.
We absolutely know with almost 100% certainty that there will be 70 million cars on the road with Sat radio factory installed in 2015. That is just about a given with new car sales averaging up to normal over the next few years and a 60-65% new car OEM install rate.
The penetration rate of used cars is built in to the stock. It is A KNOWN. I can’t emphasize that fact enough. The market already knows the numbers due to the history of new car penetration being in the books over the last 5 years. It’s the CONVERSION RATE that matters. That’s where they have to execute. It’s ALL that matters in used cars.
Also let me point out that the market already knows that the average time it takes for a new car to get to a second owner is 4 years. So it is very simple to calculate how many used cars have sat radio in them with the new car penetration numbers well known for the last 5 years. I can’t emphasize enough how important conversion will be in second cars with the penetration numbers already built in and a virtual certainty.
I agree that conversion is the metric we want to know. That is a given. The auto sector went from about 15 million new cars sold on an annual basis to less than 10 million. The age of the average car is getting older. Those using old assumptions are well off the mark at this important time. The level of used cars that are satellite equipped is just now getting to meaningful numbers. Conversion rate is the goal, but as I stated earlier, it is what the potential is that matters. That is what this report will begin to measure. The info will have value.