$SIRI Boosted By Rising Auto Sales
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Auto sales in the United States for March are expected to climb as much as 1.47 million, according to Jeremy Anwyl, auto sector analyst with Edmunds. The sales for the quarter are expected to come in at 3.7 million, an increase of around 7 percent from the first quarter of 2012 .
According to the research report from Trefis this is a positive sign for the radio service provider Sirius XM Radio Inc (NASDAQ:SIRI). The company expanded its subscriber base to 2 million net subscribers, and its revenue shot up by approximately 13 percent in 2012. Sirius XM Radio Inc (NASDAQ:SIRI), according to the report, has been able to add to its subscriber base with because of factors like an increase in vehicle sales, subscriber retention, stable conversion rate of a new vehicle and an increase of used car.
The main contributor in the growth of Sirius XM Radio Inc (NASDAQ:SIRI) is the increase in vehicle sales, in the United States. There is an increase in the automotive market due to the availability of financing and lease deals. In 2012, the United States witnessed 14.5 million units sold and sales may cross 15 million in 2013. The new vehicle conversion rate was approximately 44 percent for the fourth quarter and most possibly will float between 44-46 percent in the future. The new car penetration rate came in at 67-68 percent .
Sirius XM Radio Inc (NASDAQ:SIRI) will have ample room to get subscribers with the new vehicles slowly entering the used car market. Sirius XM expanded its subscriber base to around 1 million from the used car channel. Further, it is expected that there will be an increase in the figure and will reach up to 1.5 million in 2013 .
According to the report, the subscribers in Sirius XM will increase from estimated 23.9 million in 2012 to around 35.6 billion by the end of the forecast period of Trefis. If the company can achieve a more success rate in new, as well as used cars, then it can achieve the subscriber base of around 40 million by the end of Trefis forecast period, which would ultimately result in a 10 percent increase in the price estimates of Sirius XM .
Sirius XM Radio Inc (NASDAQ:SIRI) has entered into agreements with many auto manufacturers resulting in about 50 million vehicles in the U.S. are currently equipped with satellite radios. Management expects this figure to grow by at least 1.5 times over the next five years . The report believes that doubling of the figure might not be possible due to increased competition from players like Pandora.
Sirius XM is trying hard to expand the Internet medium and promote its online streaming app . If successful, this will help the company to broaden its subscriber base and defend against Internet-based competitors that are expanding into in-vehicle systems. The company with its new service called MySXM is planning to give users a personalized radio experience , similar to that of Pandora Media In
Source By Aman Jain HERE
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