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Friday, June 27, 2014

SiriusXM Looks To Increase Used Car Penetration

While Sirius XM’s radio penetration in the new car market stands high at 70%, growth in this metric has slowed down in the last few years, according to Forbes.

The penetration rate increased substantially from 55% in 2009 to 67% in 2011, but it grew by only 3 percentage points in the next two years, indicating that the penetration rate is stabilizing. With a stable penetration rate in the new car market and moderating new car sales, subscriber growth for Sirius XM is getting stagnant. During Q1 2014, the company added just 267,000 net subscribers, which was significantly less than 453,000 subscribers added in Q1 2013.

As the new car market matures, Sirius XM is turning its attention towards the used car market.

Companies like CarMax and Vehix, which sell used cars, report that satellite radio penetration in the used car market is around 30%. This market is turning attractive for Sirius XM and the penetration levels could rise in the future driven by the company’s efforts to tap this opportunity. Over the years, the satellite radio provider has deployed several initiatives such as two-week free subscription, pre-owned vehicle program and Service Lane, to encourage used car buyers to subscribe to its services.

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