With half of February gone, it is time to look at where auto sales are stacking up. There are a few points of good news for Sirius XM (NASDAQ:SIRI). The first, and what will be most widely reported is that the pace so far this month will actually exceed the SAAR of 14.1 million that got the year off to an unexpected good start. If the current pace continues we could be looking at a February SAAR of 14.2 million. This is a big positive for Sirius XM.
Perhaps lesser known is another piece of great news that we are seeing in February. While many SIRI investors were excited with the start in January, a closer look at the data revealed that Fleet sales were unusually high. Fleet sales came in at above 24%, and while any sale is a positive for the auto sector, fleet sales do not always help satellite radio as much as retail sales. All of that being said, Edmunds is expecting retail sales to come in at 853,000 as compared to retail sales of 691,000 just one month ago. That represents a boost of 153,000 in retail auto sales. Better still, if fleet sales return to average, the sector will post February sales of over 1,000,000 units, a key figure for satellite radio investors. Last year we did not see auto sales of over 1,000,000 until March.
The last piece of good news is the fact that President's Day is typically a big boost for auto sales. This means there is a possibility that the second half of the month could be even better than the first. In all likliehood, if the pace stays the same or improves, Sirius XM investors will see some very positive headlines during the first week in March. This is a distinct difference from last month when the early part of the month was at a slow pace and made negative headlines a possibility.
All of this being said, Edmunds does warn of a dynamic that could impact March. The weather for much of the country has been warm, and perhaps this has allowed more buyers into the market than would otherwise have happened. Think of it as a pull ahead effect where February sales take a bit off of the table from March. It is obviously far too early to tell, but it is a nugget of information to keep in the back of your head. Even if this is the case, March of 2012 should still provide year over year growth from March of last year.
Simply stated, 2012 auto sales look to be shaping up. Positive traction in auto sales will offer consumer confidence, which could translate to people once again considering "luxury" items like keeping satellite radio after a trial period. The ultimate in confidence in the auto sector is something I spoke about last month. Seeing February deliver a SAAR of over 14 million with fleet sales returning to normal levels.
Disclosure: I am long SIRI.