Sirius XM attributes 14% rise in subscribers in 2Q to higher new-car sales

Article by Anita Panait, on August 9, 2012

Sirius XM Radio Inc. posted a 14-percent increase in subscribers in the second quarter of 2012, attributing the surge to higher new-vehicle sales. Sirius XM posted $3.1 billion in net income in the second quarter of 2012, boosted by a $3 billion income tax benefit, compared to $173 million in the same period in 2011.

Sirius XM logged a 13-percent rise in revenues to $837.5 million. At the end of the second quarter 2012, Sirius XM had 22.9 million subscribers, boosted by around 622,000 subscribers during review period, and 1.02 million subscribers during the first half of 2012. According to Sirius XM chief executive Mel Karmazin, around two-thirds of all new vehicles sold in the United States are fitted with a satellite radio and a trial to Sirius, thanks to the company’s long-term deals with carmakers.

Karmazin was also pleased with Sirius XM’s growth in the used-vehicle market. Karmazin said that vehicles relegated to the second-owner market are likely to have a satellite radio. The company’s new-car penetration rate began to increase materially five or six years ago.

According to Sirius, the rate of people becoming paid subscribers after their trials terminates remained steady. Sirius XM chief financial officer David Frear said that the new vehicle consumer conversion rate was around 45 percent for the second quarter of 2012, a figure similar to the numbers posted in the second quarter of 2011. Karmazin disclosed that Sirius XM has conservative auto-sales expectations for the second half of 2012, as the economy shows signs of "tepid growth."

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