The folks at Sirius XM gather lots of forecasts on auto sales, but CFO David Frear told the UBS 39th Annual Global Media and Communications Conference that there’s quite a bit of disparity over what 2012 new car sales will be. But Frear is confident in projecting that by the end of this decade there will be over 100 million cars on the road with satellite receivers in the dash.
There is plenty of competition, though, he added. The Sirius XM CFO noted that there are already an estimated 235 million cars on the road in the US with AM and FM radios in the dash.
That 100 million estimate doesn’t mean that Sirius XM will have that many subscribers. The company has to convert new car buyers from free samplers to paying customers. Asked about the makeup of the 46% conversion rate, Frear indicated that some luxury models have conversion rates above 70%, while some lower-cost nameplates are below 30%. Sirius XM has also been providing dealer incentives to turn buyers of satellite radio-equipped used cars into subscribers.
As for the new car sales, Frear told the investor conference that most of the 21 forecasters that Sirius XM follows have recently lowered their estimates for 2012. Those forecasts range from 13.1 million units to 14.3 million, with those high estimates among the oldest – and ones that Frear expects to be updated downward. “The overall average of everybody out there is right now around 13.6-13.7,” but he warned that more revisions are likely within the next month.
RBR-TVBR observation: There are a lot of cars on the road with inactive satellite radio receivers. Sirius XM is getting better about targeting the used car market, but there are always going to be a lot of cars with inactive satellite radio receivers. On the other hand, unless the receiver is actually broken, no subscription activation is necessary to make the AM-FM part of the receiver work.
