SiriusXM Too Reliant on Auto Industry?

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September 30, 2011
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October 7, 2011

SiriusXM Too Reliant on Auto Industry?

SiriusXM LogoIt’s no secret that the auto industry isn’t exactly booming.  The state of the economy naturally impacts large purchases.  Just last month, Ford lowered its 2011 sales projections to below 13 million units.

For companies like SiriusXM, which supply goods and services to the auto industry, this raises concerns.  Granted, analysts say this reduced level of new car sales can still provide a decent return for SiriusXM, but it won’t result in significant growth.  This begs the question: is SiriusXM too reliant on the auto industry?

SiriusXM has made moves to increase their revenue.  Beginning January 1st, prices for the service will increase.  This increase is only $1.54 per month, yet will  contribute millions to their bottom line.

In addition, SiriusXM has forged a deal with GM to offer a full year of the XM Premier Package, which includes Howard Stern and all NFL games, and XM NavTraffic to buyers of the 2011 GMC Sierra.  The standard promotion thus far has been a three-month trial of the basic package.  Obviously, the hope is to lure owner to continue their subscription with the higher package after they have enjoyed all the features for a year.

And let’s not forget those lapsed subscribers; SiriusXM certainly hasn’t.  For two weeks in September, they ran a “Bring Your Radio Back to Life” promotion.  Non-subscribers with access to a SiriusXM receiver were able to enjoy 60 channels.  Better yet, when the trial was over, they were offered a reduced rate to renew their subscription.

But the bottom line is that the bulk of SiriusXM new subscribers come from the sale of new automobiles.  So…yes, SiriusXM does rely heavily on the auto industry.  Its success can be tied to the success or failure of new car sales.  However, SiriusXM is aware of that.  They are looking for ways to improve their revenue on their own and by working with their automaker partners.  Now they just need to hit on something that boosts new subscribers outside of the new car arena.

Theresa Russell is Director of Promotions at The Radio Agency. Please follow The Radio Agency’s Blog “Sounding Board” by subscribing to the email or RSS links above. Visit our website