Latest Toyota Slip Could Impact Auto Sector And Satellite Radio
The Toyota recall situation, congressional hearings, and bad press that followed actually served to boost auto sales in the first quarter of 2009. This was accomplished in part because Toyota launched a massive ad campaign in an effort to save face, complete with 0% financing, an interest rate that has not been seen in quite some time.
This week it was announced that Toyota has halted production as well as sales of the Lexus GX 460 after Consumer Reports called out safety risks with the vehicle and potential roll-over issues. Sales of the vehicle began about 4 months ago. To date, just under 6,000 units have been sold. While the numbers are not huge, it comes on the heals of what can only be termed as a fiasco at Toyota.
This could force the company to up the anti on their ad campaign, and extend 0% financing to try to at least maintain a reasonable sales pace. This means that other manufacturers will need to follow suit. Good incentives for consumers was just enough to boost sales late in Q1. Will the continuation of good incentives help boost Q2 sales?
While 0% financing may not be very helpful to the auto companies, it provides a needed boost for the satellite radio subscription numbers. As long as auto sales can maintain about 1,000,000 per month, the subscriber situation at Sirius XM can remain in a growth phase.
All of that being said, the latest news with the Lexus GX 460 has hit some news wires but not received a lot of television attention. If this news gets swept under the rug somehow, then the continuation of heavy incentives from auto makers may end sooner rather than later.
The key for satellite radio investors is seeing heavy incentives in the auto channel continue. As long as there are 0% deals out there, there will be car sales.
Position – Long Sirius XM, No Position Toyota
Spencer,
Are you serious ? You must be really bored with this piece of junk. I won’t even read it with that title.
sxminvestor…..
You are more than welcome to read something else somewhere else if you so desire. You wont even read it, yet you take the time to comment…..Get real! Who is the one who is bored?
I did go back and read it. I am just surprised you wrote such an article on something so minor when we have all this positive news for the equity, nicely over a $1 yesterday.
Just as WWD says, the Totyota fiasco likely helps Sirius because they may go to anotehr dealer that has higher penetration rates. Do you really think this was a big deal, one model # for Toyota ?
I just complimented you the othr day and am happy you are writing and nothing wrong with writing about this, but why the heading when investors have been through hell with this $1 mark and don’t need this to get picked up by other news sources and get blown out of proportion like you are doing a good enough yourself.
1.11 close today was nice.
“but why the heading when investors have been through hell with this $1 mark and don’t need this to get picked up by other news sources and get blown out of proportion like you are doing a good enough yourself.”
What would you think about a person who cherry picked things to write about based on the stock price? He wrote what he did because for whatever reason it struck him and the stock price has no effect on what he says… its called integrity.
The Toyota fiasco actually helps Sirius because very few Toyota’s have satellite radios installed. The breaking/acceleration issues scare people into buying other cars (e.g. Ford Fusions) which all have Sirius radios. The number of subs should go up as a result. So when the Prius goes flying down the highway out-of-control, Mel makes more money.
Charles,
It’s an over exaggeration of the effect of the Toyota issues effect on Sirius subs.
I did not mean to be rude, I just think it the title was odd and you know how the bashers and shorters of this stock use the headings to their advantage.
Toyota had good March numbers because of aggressive advertising that they were a “good and responsible company”. These ads combined with big incentives made for good sales numbers. Other manufacturers had to follow suit.
This latest news fly’s um the face of what Toyota had been saying. This could force Toyota to continue incentives for longer than anticipated. This other manufacturers will need to follow suit again. Better incentives mean more sales and translate into more subs.
People need to think beyond today, and see how dynamics impact tomorrow.
See this headline…..This issue does not look like it is going to go away….Thus, the article