Saturday, January 06, 2007
The OEM Picture Broken Down
January 6, 2007
The satellite radio world seems to feel that this is the year that OEM's will rise and become a determining factor with these equities. Many statements are bandied about, but at the end of the day it is not who the deal is with that is important. It is how many installations happen, what the take rate is, and how much revenue the satellite radio gets to keep.
CLICK CHART TO ENLARGE
First lets look at the "who's-who" list:
Audi
Exclusive factory Install deal with Sirius. Audi had record sales in 2006 and sold 90,116 vehicles, coming in up 8.5% from 2005. Audi is targeting an 80% installation rate in the 2007 model year. Using 2006 sales, this represents roughly 72,100 installs. Audi buyers get a 3 month promotional package for Sirius.
BMWExclusive factory install deal with Sirius. BMW had a record sales year and sold 313,603 vehicles, coming in up 2.1% from 2005. The installation rate for BMW is not known, but covers all models. BMW buyers get a 1 year package for Sirius
Chrysler/Dodge/JeepExclusive factory install deal with Sirius. Chrysler had a decline of 7% but did sell 2,142,505 vehicles in 2006. Chrysler is now targeting an installation rate of 40%. Based on the 2006 figures this would represent about 858,200 units. Chrysler buyers get a 1 year promotional package for Sirius. Chrysler vehicles are counted as subscribers from the date of manufacture. Chrysler pays for a 1 year subscription which Sirius books as deferred revenue. The consumer gets a 1 year promotion, and the revenue is reported as the service is delivered. Ford is handled in a similar fashion, but for 6 months rather than a year.
Ford/Lincoln/Mercury
Exclusive factory install deal with Sirius. Ford had a decline of 8% but did sell 2,900,000 vehicles in 2006. The installation rate for Ford is unknown, but they are increasing the factory install program to 21 models this year vs. 4 in 2006. Ford byers typically get a 6 month promotional package for Sirius, but certain deals have had Sirius packaged for up to 3 years.
General MotorsExclusive factory install deal with XM. GM sales had a decline of 8.7% but did sell 4,100,000 vehicles in 2006. GM is targeting installations of 1,800,000 vehicles in 2007, up from 1,600,000 that was targeted for 2006. GM buyers typically get a 3 month promotional package for XM.
Honda/Acura
Exclusive factory install deal with XM. Honda reported their 10th consecutive year of sales growth, setting another company record in the process. Honda sold 1,509,358 vehicles in 2006. Honda is targeting the installation of 650,000 XM units during 2007. Honda buyers typically get a 3 month promotional package for XM.
HyundaiExclusive factory install deal with XM. Hyundai reported record sales of 455,520 cars in 2006. Hyundai is targeting 100% factory installs across their platform for 2007. Hyundai buyers typically get a 3 month promotional package for XM. Unlike GM promotional subscriber, for which XM receives revenue, the Hyundai installations will not be counted as subscribers during the promotional period. Upon completion of the 3 month trial, those that elect to keep the service will then be counted as subscribers. Those that do not elect to keep the service will not count as deactivations because they were not counted as subscribers in the first place. The determining factor for whether an install is counted as a subscriber ties to revenue. If there is revenue received during the promotional period, then it is counted as a subscription. If no revenue is involved it is not counted as a subscription.
IsuzuExclusive installation program with XM. Isuzu likely sold less than 5,000 vehicles in the U.S. during 2006. Whether or not they are even installing XM units is not known. Given the sales volume, I would not expect much of a contribution from Isuzu in 2007.
Jaguar
Exclusive port/dealer install program with Sirius. Jaguar sold 20,683 vehicles in 2006 down 32% from 2005. The Ford owned company’s installation rate is unknown. Jaguar buyers typically get a 3 to 6 month promotional package for Sirius.
KiaExclusive factory install program with Sirius. Kia sales were at 294,301 up 6.7% for the year. Kia is targeting a 100% factory install program for the 2008 model year. The installations in 2007 are unknown.
Land Rover
Exclusive factory install deal with Sirius. Land rover had a record year selling 47,774 vehicles. Installation rate is unknown. Land rover buyers typically get a 3 to 6 month promotional package for Sirius.
Mazda
Exclusive factory install deal with Sirius. Mazda sold 268,768 vehicles in 2006 up 4% over 2005. Installation rates are unknown. Mazda buyers typically get a 3 month promotion for Sirius.
Mercedes Benz/BentleyExclusive factory install deal with Sirius. Mercedes/Bentley sold 248,100 vehicles in 2006 up 11%. Mercedes is installing Sirius in 66% of all vehicles. Based on 2006 numbers this would represent over 165,000 installs. Bentley offers 100% factory installs. Mercedes Benz buyers typically get a 3 month promotion for Sirius. Bentley buyers get a lifetime subscription.
Mitsubishi
Exclusive factory install program with Sirius. Mitsubishi sold 118,558 vehicles in 2006 down 4.4%. Mitsubishi is targeting factory installs in 4 model lines for this year. The installation rate is unknown. Mitsubishi buyers get a 3 month promotion for Sirius.
Nissan/InfinitiExclusive factory install program for XM. Port and dealer install program for Sirius. Nissan sold just under 1,000,000 vehicles in 2006. This was down from 1,100,000 they sold in 2005. Nissan is targeting an extensive factory install program with XM in the 2008 model year. Nissan has stated that they anticipate nearly 1,000,000 factory installs by 2010. The status of the port and dealer install program with Sirius beyond the 2007 model year has not been announced. Nissan is one of the OEM's that analysts tend to put entirely in the XM column. The split between Sirius and XM has never been made public, but conversations with various parties seem to indicate that at a safe assumption is that it is near parity and the provider with better retail share seems to get an advantage in port/dealer installs. SDARS investors need to consider Nissan closely when trying to determine OEM share. There are installs for both Sirius and XM, and that needs to be accounted for in projection models. Similar to the Hyundai deal, XM will not count factory installations as subscribers during the promotional period (no revenue).
Porsche
Exclusive factory deal with XM. Porsche sold 36,096 vehicles in 2006, up 7% over 2005 sales. Installation targets for Porsche are not available, Buyers of Porsches typically get a 3 month promotional package for XM.
Saab
Installation deal with XM. Saab sold 36,349 vehicles in the U.S. in 2006. The installation rate for SAAB is unknown. Buyers of Saab typically get a 3 month promotional package for XM.
Subaru
Subaru has a factory install program with both Sirius and XM. The service you get depends on the model you select. Subaru sold 200,703 vehicles in 2006 which represents a record for the manufacturer. Installation rates for Sirius and XM are unknown. Buyers of Subaru's typically get a 3 month promotional package for Sirius or XM.
Suzuki
Exclusive deal with XM. Suzuki sold 100,990 vehicles in 2006 up an impressive 23% from 2005. Installation rates are unknown. Suzuki buyers typically get a 3 month promotional package for XM.
Toyota/LexusToyota has a factory install deal with XM and a Port/Dealer install program with Sirius. Toyota sold 2,540,000 vehicles in 2006. Installation rates for factory installs are unknown, and the split on port and dealer installs are also unknown. Toyota is another manufacturer that analysts tend to put wholly into the XM OEM column because of the existence of a factory install program. To date, the factory install program, which was announced some time ago has not been very extensive. Research indicates that port and dealer installs still make up a bigger share of satellite radio installs by a wide margin. The split between Sirius and XM is also unknown. Indications that installs are near parity but favor the retail leader have been made. It should also be noted that the split varies regionally. Penske, the biggest Toyota dealer in the U.S installs Sirius. Buyers of Toyota typically get a 3 month promotional package for Sirius or XM. For XM, the factory installed units from Toyota and Lexus will not be counted as subs during the promotional period (the revenue issue).
VolvoExclusive factory install deal with Sirius. Volvo sold 116,067 vehicles in the U.S. The installation rates for Volvo are unknown. A Volvo buyer typically gets a 3 month promotional package for Sirius.
VW
Exclusive factory install program with Sirius. VW sold 235,140 vehicles in 2006, up 4.9%. VW is an targeting 80% installation rate this year. Based on 2006 figures, this would represent a bit over 188,000 units. VW buyers typically get a 3 month promotional package for Sirius.
There are some other deals in place as well, but the numbers are not substantial.
For Sirius part they claim that they will start off 2007 with 132 models in factory install programs.
XM claims, "
our automotive partners represent nearly 60% of all new automobile sales in the U.S." XM does indeed have deals in place with OEM’s that represent roughly 60% of U.S. auto sales. Many people confuse XM's statement to mean that XM has the only opportunity for installs available for 60% of the OEM market. We caution our readers to remember that some of these deals (22.51% have deals in place with both companies, be it factory install or port and dealer install) also have relationships with Sirius. By contrast, Sirius could claim that they have automotive partners that represent nearly 63% of the U.S. market. The biggest player in question is Toyota who finished 2006 with 15% of the market. Toyota equates to a "swing state" in an election, and it depends on what type of install (chads) you count. As with a swing state, opinions will vary, and passions may run high with this subject. The chart above breaks down the OEM's, their respective sales, their respective market share, and how these deals break down by satellite radio provider.
The point of this article is to clarify what the deals are and to point out that perception sometimes does not equate to reality. As we have said before, it is not the market share of the OEM that really matters. It is how many installs there are, what the take rate is, the cost of the installs, and the amount of revenue that the satellite radio equity gets to keep going forward.
Labels: market share, OEM, sirius, xm
1/06/2007 04:26:00 PM
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5 Comments:
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This is fantastic reporting. Thanks for pulling all this together for us. I think the Toyota arrangement is the most meaningful. If, as I have always believed, it's the content that matters, then the choice the Toyota customers make is the best gauge of "who has the more valuable service."
By , at January 06, 2007 6:37 PM
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Very impressive breakdown. Thanks for all the info !!
Are these sales figures just in the U.S. ? or North America? or Worldwide?
By , at January 06, 2007 7:06 PM
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Well researched and laid out. SSG continues to impress!
By , at January 06, 2007 9:48 PM
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Your analysis of Toyota and Nissan are both disingenuous.
Sirius has been able to accomplish port & dealer installs on a temporary basis. However, as factory XM is rolled out, these will become virtually 100% XM.
Maybe it comes down to how important you believe the "factory" install is vs. the "port/dealer" install. And whether you believe people will DEMAND Sirius in these brands even though it means additional cost, giving up features XM can provide that Sirius cannot, and most importantly, having enough awareness to even care.
By , at January 07, 2007 12:03 PM
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You state that my analysis is disengenuous on Nissan and Totota. I painted the picture that exists today, and will carry through most of 2007. There has been nothing to indicate that the situation has changed.
Nissan still does port and dealer installs, and further utilizes an interoperable antena. Additionally, Nissan is using a Visteon receiver capable of servicing both Sirius and XM with the swap of a simple box. I clearly state that the port dealer relationship beyond the 2007 model year is unknown.
With Toyota, their website clearly shows availability of both servives. Anyone following the sector is well aware that the factory installs have been very slow with Toyota, and the bulk of Toyota satellite radio installs still come from the port and dealers. how much will this change throughout 2007 with 2007 models already being sold?
Will people demand Sirius, or demand XM???? Sure, and car dealers and manufactures will begin to notice that as time passes. Most will not care which service they have until they get to experience either or both.
It is a shame that in this day and age consumers are forced into one or the other.
Your comment about additional cost makes no sence whatsoever. With toyota and Nissan a consumer simply orders the one they want. The cost is the same. Both companies offer satellite services, and both offer navigation services. An incorporated service may make a consumer choice more difficult, but it is not an issue that can not be solved.
Right now dealers can order whatever they wantr, as can consumers.
SSG
By SSG, at January 07, 2007 2:27 PM
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