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Auto Sales Increase Bodes Well for Sirius

Published on January 21, 2011
by John Paczkowski

Looks like Sirius XM’s run of good luck will continue well into the new year. New-vehicle retail sales data from J.D. Power and Associates suggests an increase in consumer demand for new cars. And for Sirius that means continued subscriber growth–perhaps even significant subscriber growth.

The company’s satellite radio service is pre-installed in about 60 percent of cars sold in the United States, and historically its take rate has been upward of 44 percent. So when J.D Power says that light-vehicle sales for January will hit 794,500 units, 14 percent higher than January 2010, that’s good news for Sirius. Even better is this: The research firm is raising its retail sales forecast for the entire year. Not by much–just to 10.5 million units from 10.4 million units.

But the trend is upward, and J.D. Power and Associates’ Jeff Schuster says there’s room for even more upside. “Optimism is increasing for the auto industry following a stronger outlook for the economy,” he explained. “GDP growth is expected to be in the 3 percent to 3.2 percent range for 2011. As the macro drivers continue to improve and credit availability increases, further upside potential remains.”

In other words, 2011 is shaping up to be a good year for Sirius XM.

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