By Brian “Newman” Rayl
Yesterday, September 1st, the auto industry released sales numbers for the month of August. According to Edmunds Auto Observer, the seasonally adjusted annualized rate (SAAR) came in at 11.5 million with 997,001 new vehicles sold for the month nationwide, down a staggering 21% year-over-year from August 2009. For Satellite Radio provider Sirius XM Radio (NASDAQ: SIRI), anything above 900,000 vehicles sold on a monthly basis will allow them to add subscribers or, at a minimum, break even.
Year-over-year comparisons for auto sales in August were ugly. Back in August 2009 the economy was in dire straits and the government decided to take action by initiating the “Cash For Clunkers” program, which allowed people to trade in older, less fuel-efficient vehicles for new fuel efficient vehicles. This stimulus program worked wonderfully. In July 2009 the SAAR was less than 11.3 million. Cash For Clunkers boosted the SAAR to just under 14.2 million for August 2009. Automakers are dismissing the year-over-year comparisons, saying that cash for clunkers was only a temporary boost to the numbers because of government incentives and did not reflect the reality of the auto market at the time. Once the Cash for Clunkers incentives expired, auto sales numbers quickly dropped. September 2009 followed with a 9.4 million SAAR and October 2009 finished with a SAAR of 10.4 million. Amid August’s muted auto sales, some sources are hinting that further government stimulus may be considered.
Taking the biggest hit of the car manufacturers was Toyota (NYSE: TM), falling a staggering 34% from a year ago comparisons while still battling image problems following recalls due to brake issues. Toyota was closely followed by Honda, which dropped 33% and Nissan which slid 27% from year ago sales. The American manufacturers fared a little bit better. Ford (NYSE: F) took an 11% hit, while GM (which recently announced its IPO), took a 25% hit year-over-year. Out of the “Big 6″ car manufacturers the lone standout in these numbers is Chrysler, who was not able to fully benefit from Cash for Clunkers due to their bankruptcy proceedings and factory shutdowns. Chrysler showed an increase in car sales year-over-year of 7%.
August auto sales appear to be quite similar to July auto sales, with the biggest sellers appearing to be luxury vehicles. Audi touted its best August sales ever, climbing 14% from August 2009. Land Rover climbed 11%. Tata Motor’s (NYSE: TTM) Jaguar climbed an astounding 63%. Porsche posted a 33% gain, and the Mercedes Benz squeaked in with a 7% increase in sales.
Going forward, auto executives point to a soft economy as the reason for the slowdown in the auto industry, saying that it is hard to improve when unemployment numbers are up, housing is down, and the credit markets still tight for car loans. Nearly everyone is seeing a weaker second half of 2010 as compared to the first half. General Motors has taken a big step to help the credit market issue by purchasing AmeriCredit in an all cash deal which is still pending. With the increases in luxury car models, it appears that just as in housing those with good credit can get great deals.
Disclosure: LONG SIRI, F
Contact the author at newman@satelliteradioplayground.com
Nice article Newman. The two most important points here as far as SXM is concerned: 1.Sales were over 900,000 in fact, just short of 1 million. This is well within Mel’s business model for being successful and 2. “the biggest sellers appearing to be luxury vehicles”. These sales will also be almost “all” satellite radio subs based on previous experience with high end buyers.