August Auto Sales Signal Stability for Satellite Radio Investors 22 comments
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Auto sales are still down. That is the news that most anticipated. In seeking a silver lining, one can note that for most manufacturers, sales were better in August than in July. However, sales are still down, and that is still cause for concern. In 2007 there were already 11,024,589 vehicles sold at the end of August. This year, sales have not yet topped the 10,000,000 mark, coming in at 9,794,774. This represents an 11.2% decline over last year.
For satellite radio watchers, the fact that August was better than July should be pleasing. Better sales translate into more subscribers, and with satellite radio installations still ramping up in the OEM channel, the subscriber pool from new car sales remains not only stable but growing.
Many had hoped to see more traction in auto sales at this point. Manufacturers have just begun steep discount programs, and perhaps these programs, combined with dropping gas prices, will boost consumer confidence back to a point where people are once again looking to buy cars. In many cases, the sales are helping, but the credit situation is still holding the industry hostage.
From a satellite radio investor's perspective, the current pace of auto sales still represents stability for the OEM side of the business. In the second quarter there were still record numbers of gross OEM subscribers in satellite. That trend should continue with the third quarter and beyond as manufacturers such as Kia ramp up into meaningful numbers of installations, and Ford (F), Nissan (NSANY) and others continue their paths towards an installation rate between 70% and 100%.
We would like to caution readers that the satellite installations section of the chart below is a very rough estimate based on announced installation rates.
[click through to enlarge]
Position: Long Siri
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This article has 22 comments:
Short Interest (Shares Short) 209,124,300
Short Percent of Float 6.66 %
Short Interest - Prior 310,672,200
Short % Increase / Decrease -32.69 %
Eventhough cars sales are down as Tyler pointed out August sales were better than july, and they will pick up in the 4th quarter as for SIRIUS XM installs will continue to rise because of increased penetration to the auto market, new and used
Which is it and why the big Flip Flop???? Covering your short position or just confused?
Tyler thanks for the info and I look forward to your show tonight on SirriusBuzz.com. From your numbers it looks like spending time with the Toyota, Kia, and Mitsubishi folks would impact penetration significantly. I have a in dash on screen unit in my Misubishi Outlander and its a great product, easy to navigate categories and find what your looking for with 4 bands and 40 programmables.
1. Mel and Steve should join hands togther and reach consumers through(iPOD, iTouch, or iPhone)
2. Expansion outside U.S.
There is no doubt about the content and reach of SAT radio.
Content is king!!!
Viva la Lumineux de chien
Killerkaul---
courir chien bleu, courir
and start producing Nat Gas Cars and more Electric/hybrids....ma... be
a boom in the new car mkt....
Chip set subsidies and radio hardware are paid for but revenue sharing agreements per OEM contracts must still be honored. Marketing incentives to the used car dealers vs the certified pre-owned dealerships are a format needed to be worked out, etc.
This is why I believe Mel said it will be a focus for 2009, not 2008. There is a lot to be done in little time in 2008 and his focus seems to be on Best of Both technologies, requiring a consolidation of their spectrum and simulcast ability, and Merger Synergies, while implementing and assessing FCC conditions.
Open access, FM transmitter issues, assessment of shutting down XM repeater towers, interoperable radios and ala-carte programming will be plenty to keep them busy. Oh and they have to have a conference call giving analysts and investors solid guidance on Debt, Expense Reduction and new Revenue Generating programs so we can move the stock price in the right direction.
In short, the lack of guidance due to the FCC decision delay, as Tyler has noted many times, has put everyone all over the place with expectations. I believe this will cause the SP to be in this range due to these expectations being unreasonable and investors being impatient. Tyler's call about the weary investor was dead on prior to the merge which why he said there would be little if any pop. I salute his insight to my portfolios dismay.