Chrysler and GM Dealership Closures Will Impact Sirius, As Expected

The headlines came out yesterday, but the news was not unexpected. The troubles at Chrysler and GM have been known for quite some time, and dealership closings were inevitable. The impact of these closings will be wide reaching both economically, as well as in the psychology of the consumer.

Consumers sometimes become as loyal to a dealership as they do to a car brand. A good dealer gets repeat sale after repeat sale. If that dealership offers good service, they get continued business. In the near future it is possible that 789 Chrysler dealerships will close if the court approves. From the GM standpoint, it has already been announced that 1,100 dealerships will close. If these dealerships close, consumers will find themselves shopping, and perhaps will shift to other brands.

According to Chrysler, half of their dealerships accounted for 90% of their sales. If true, these metrics virtually demand that closings happen. The American car companies have had many challenges in trying to compete with imports. Huge costs and a perceived lower quality have riddled the big three for years. With a slumping economy, the issue has simply come to where a substantial change needed to happen.

The big benefactors of Chrysler and GM’s woes will likely be Ford (F), and Toyota (TM). For satellite radio, this presents a small problem. While Toyota had announced that they are installing 4 times as many satellite radios this year, the number left off of the table was what they installed last year. That number was smaller than many think, and the bulk of those will not happen until the 2010 model year begins. Additionally, as dealerships close, the inventory will need to be shifted creating a more confused situation, and perhaps causing yet more production cuts or delays.

All of this is important to note because the OEM picture is so critical to Sirius XM (SIRI). It also puts a greater importance on what Sirius XM does outside the OEM channel. The Sirius XM iPhone application, and other marketing can help fill the void (to a small extent), but only if they are properly marketed.

Long term, the dealership network will be leaner, but the consistency of the brands will be easier to maintain. This should help GM and Chrysler right the ship if sales pick up soon, and a year from now we will have a decent picture of the OEM landscape that is not scattered with asterisks.

Position: Long Sirius XM, No Position OEMs

Comments

[jmsithy:]

this is very interesting I invested 1700 shares market limit .36 and have buy in at .35 for 2k shares now its frozen at .3501

May 15 03:15 PM

[connorport:]

He states this because you act like a timid puppy who's just made his first buy. I've already posted to you twice and advised you what to do. Listen to the advise and quick acting like a deer in the headlights here. If i drops then buy more to lower your average. If you're scared then sell it all and put the money in CD's or something. Christ!!!!!



On May 15 02:22 PM Mr. Stupid wrote:

> MMMM, I do own shares....25,000 to be exact. Why would you say I
> don't own stock when you have no idea???
>
> I value your opinion but don't state things that you no nothing about
> me.
>
> Thanks, Frank

May 15 03:16 PM

[connorport:]

Thats because you will be waiting in line for .35. There are over a million set there.


On May 15 03:15 PM jmsithy wrote:

> this is very interesting I invested 1700 shares market limit .36
> and have buy in at .35 for 2k shares now its frozen at .3501

May 15 03:17 PM

[dw57:]

not sure why anybody thinks that Ford or Toyota will benefit from the collapse of the others. so far with just what has been going on to date, it looks like their sales are tanking as fast those in trouble. been a very noticeable trend for decades now (not new), that as GM sales go, the industry goes. If GM tanks, the other do too. last example, after 9/11 GM was the leader by putting out 0% loans, and the entire industry took off (right or wrong). and thats not the only example

May 15 03:18 PM

[jmsithy:]

oh I thought I had the power to freeze the market/ because when ever I buy in it goes down so I thought I would work it both ways

May 15 03:18 PM

[Stan Muse_:]

There will be a sharp drop in the price of all those cars still on the lots of GM and Chrysler. That will mean huge car sales in the next few months which will be a windfall for SIRI.

May 15 03:22 PM

[Missing_Link:]

Not necessarily. You are assuming that a price drop will automatically succeed in convincing consumers to buy GM and Chrysler vehicles.

That seems quite a large and risky assumption ... Price is only one of many factors in a consumer's buying decision.

Car buyers may well be unwilling to buy a car from a company they believe will go bankrupt regardless of the price. If you plan to keep a car for 5-10 years, you want to know the company will still be around to service it.

On May 15 03:22 PM Stan Muse wrote:

> There will be a sharp drop in the price of all those cars still on
> the lots of GM and Chrysler. That will mean huge car sales in the
> next few months which will be a windfall for SIRI.

May 15 03:33 PM

[Bababooie:]

Parking lot subs are stabilizing as we speak. Chrysler has not abandoned the vehicles in these dealerships. They will be redistributed. The redistribution means that the dealers wont be able to handle newly built vehicles. ooops.....They aren't building right now at Chrysler!!! That would mean that an orderly distribution of existing (parking lot) vehicles can be dont successfully! Prior to the BK shut down Chrysler had an adequate inventory on dealer lots to provide product across the board for at least 30 days. Currently Chrysler is in day 15. Doing the math this points to greener pastures for Siri with less subsidizing required for unsold vehicles.

May 15 04:00 PM

[Mr. Stupid:]

Oh my, who can't service a chrysler and Chrysler has already said they will back warranties. If not, the Gov already said they would step in and back warranties. About any american dealership has no problem servicing a Chrysler or even a GM car for that matter.

Frank


On May 15 03:33 PM Missing_Link wrote:

> Not necessarily. You are assuming that a price drop will automatically
> succeed in convincing consumers to buy GM and Chrysler vehicles.
>
>
> That seems quite a large and risky assumption ... Price is only one
> of many factors in a consumer's buying decision.
>
> Car buyers may well be unwilling to buy a car from a company they
> believe will go bankrupt regardless of the price. If you plan to
> keep a car for 5-10 years, you want to know the company will still
> be around to service it.
>
> On May 15 03:22 PM Stan Muse wrote:

May 15 04:24 PM

[Mr. Stupid:]

I agree totally. I saw just today one of the Chrysler dealerships have a 300c for $21,900. The car originally was 33k. People will buy these cars knowing that our Gov will back warranties even if Chrysler doesn't in the future.

In all actuality BK might be good in the short term for Sirius with more cars being sold.

Frank

On May 15 03:22 PM Stan Muse wrote:

> There will be a sharp drop in the price of all those cars still on
> the lots of GM and Chrysler. That will mean huge car sales in the
> next few months which will be a windfall for SIRI.

May 15 04:30 PM

[holdon:]

it sat at .33 a few weeks back and it will probably hit that again , if so, its a gift.
long siri !

May 15 05:46 PM

[Mr. Stupid:]

holdon, why you want siru to drop. You lose mo money... why? to .33?? do you think that will happen quick next week

Frank


On May 15 05:46 PM holdon wrote:

> it sat at .33 a few weeks back and it will probably hit that again
> , if so, its a gift.
> long siri !

May 15 06:25 PM

[Mr. Stupid:]

the last week Siri has been up in afterhours like .0065 or .0054. What the crap is that? Is that a way to frustrate investors? I would rather it just stay at whatever it closed than to play with such a minute upswing.
;

Urrrrr

Frank

May 15 06:33 PM

[dw57:]

depends. where do they get the parts? if C or GM go, they will take the parts with them. no parts. no fix it


On May 15 04:24 PM Mr. Stupid wrote:

> Oh my, who can't service a chrysler and Chrysler has already said
> they will back warranties. If not, the Gov already said they would
> step in and back warranties. About any american dealership has no
> problem servicing a Chrysler or even a GM car for that matter. <br/>
>
> Frank

May 15 06:54 PM

[dw57:]

i have heard some one say that they had seen 300 for about 17k. but don't expect that to continue. the whole idea of all this is to reduce competition. fewer dealers, less supply. prices will rise. in every manufacturer. and deals will die off for consumers. that is the reason for the entire exercise.


On May 15 04:30 PM Mr. Stupid wrote:

> I agree totally. I saw just today one of the Chrysler dealerships
> have a 300c for $21,900. The car originally was 33k. People will
> buy these cars knowing that our Gov will back warranties even if
> Chrysler doesn't in the future.
>
> In all actuality BK might be good in the short term for Sirius with
> more cars being sold.
>
> Frank
>
> On May 15 03:22 PM Stan Muse wrote:

May 15 07:01 PM

[jmsithy:]

because the whole idea is to buy more on the way down and sell on the way up where the thresh hold is / do you know what thresh hold is?



On May 15 06:25 PM Mr. Stupid wrote:

> holdon, why you want siru to drop. You lose mo money... why? to .33??
> do you think that will happen quick next week
>
> Frank

May 15 07:28 PM

[Mr. Stupid:]

Thresher? that's a shark right? oooops, you talkn bout somting else?...

Wats thresher?

Frank

On May 15 07:28 PM jmsithy wrote:

> because the whole idea is to buy more on the way down and sell on
> the way up where the thresh hold is / do you know what thresh hold
> is?
>

May 15 09:58 PM

[Mr. Stupid:]

It's called, "survival of the fittest (strongest)" The ones that survive (ford;honda) will sell more cars after recession recovery and auto sales pick back up. You seem to think that this auto slump is permanent. It's only alleviating the weak companies.......

Frank


On May 15 03:18 PM dw57 wrote:

> not sure why anybody thinks that Ford or Toyota will benefit from
> the collapse of the others. so far with just what has been going
> on to date, it looks like their sales are tanking as fast those in
> trouble. been a very noticeable trend for decades now (not new),
> that as GM sales go, the industry goes. If GM tanks, the other do
> too. last example, after 9/11 GM was the leader by putting out 0%
> loans, and the entire industry took off (right or wrong). and thats
> not the only example

May 15 10:03 PM

[User 368600:]

On May 15 03:16 PM connorport wrote:

> He states this because you act like a timid puppy who's just made
> his first buy. I've already posted to you twice and advised you what
> to do. Listen to the advise and quick acting like a deer in the headlights
> here. If i drops then buy more to lower your average. If you're scared
> then sell it all and put the money in CD's or something. Christ!!!!!
>
>
You made 5 posts swearing that you NEVER told anyone what to do with their money. Now you tell one poster 5 different things in only one post.
Can you spot the SIRI 'investor" ?

May 16 10:07 AM

[Mr. Stupid:]

Terristral is dead I beleive. I listened to it mornin and it was all commeriials.

Siri will be good ofr longer take. I will buy sum more next week fo sure.

Should I sell take profet if it goes up .02?

Frank

May 16 02:57 PM