It cannot be good news. Chrysler is one of the main clients for the Sirius side, and XM has GM. A dealership I used to work for was spared in the cuts, but one down the street wasn't so lucky. Either way, no one wants to buy from a car company that's going to be in Chapter 11. Chrysler is already on it's way, and GM is very close.
Cars aren't going extinct. It's a temporary slowdown in sales. People can't put off buying new cars forever, but if for a 2 year period there is a lull in sales then that's what it is. When people put it off though it means there will be a pent up demand when they realize it's okay to buy new again. The auto companies that survive in these couple of years will likely be doing pretty well in 3-5 years. They are just in a period of cutting the fat and once the business comes back they will be reaping the benefits, especially if they can stay on the leading edge of what consumers want.
Regardless some Auto Brands go away but the remaining brands still have SIRIUS XM as an option.
Taylor, your last sentence is the issue at hand. I don't believe Sirius has done a good job at staying on the leading edge of what consumers want.
Sirius is not just for the car. They have to do a much better job at getting the signal into the home where people don't have to worry about not having a signal, the signal fading in and out and so forth. Regardless of its a signal from the sat. or streamed over the internet, Sirius has to do a better job in this arena. Instead of embracing new technology, they seemed to have shied away from it. Smaller upstart companies have taken away customers and Mel doesn't seem to have a clue. I get the feeling when the merger went through, Mel kicked back in his desk and put his feet up and thought to himself.....game over. If people want Sat. radio, customers have to come to him. If Mel doesn't wise up, it might be game over for him.
Sirius/XM has come up with a few solutions thus far to deal with the shortcomings of home listening. The downside is that those take some effort to get working. Most consumers would rather not be bothered.
My guess is that they are betting on the iPhone app to get caught up. An iPod Touch is a relatively inexpensive device, and it's easy to integrate into your home entertainment system. With that, and a broadband connection, you are in business. It take the cost of hardware development and support off of Sirius/XM. They really should have jumped on it sooner.
But GM is going from about a 3,000 dealership company (I forget the exact numbers, but it's way more than Toyota dealerships) to about a 1,000 dealership company. The 1100 they're eliminating now is just the beginning. And Chrysler will be eliminating more down the road. Who's to say what Ford will do since they don't seem to be involved in the bailout. SiriusXM's problem is that they gave up on retail at a time when OEM's were selling well. Now car sales have tanked, and they have no retail sales to back them up. Not to mention the number of people who are leaving/have left satellite radio in droves.
It seems to me that Ford is the only one of the 3 that actually have a restructuring plan in place and it is being effective all without federal bailout money to boot.
Eliminating dealerships does ABSOLUTELY NOTHING for GM and Chrysler to becoming viable companies. All they are doing now is eliminating some competition between dealerships that provide the consumer with good deals to buy a new car or truck and artificially raising the prices on the new cars and trucks through the dealers that will remain meaning less consumers will probably not buy a new car or truck when it comes time for a vehicle but instead looking at a good low mileage used car they can afford.
On the Sirius-XM front, they put themselves in this box by marketing to people who spend the day in the car on the road and not to everyone making the technology easy to setup and use therefore making a totally viable alternative to regular free FM radio that is as simple use as can be, that and not keeping up with technology ala the Ipod, Slacker, Pandora, etc. . .
And it isn't like Satellite is going to be the only one affected. HD Radio is going to get hurt worse, revenues for advertising on local terrestrial radio (where most dealerships do their advertising) is going to be greatly affected. Most aftermarket outlets like Car Toys and Best Buy will see less installations due to less cars being sold.
If any of you saw the Good Morning America piece yesterday, or read any of the AP articles about the Chrysler closing, the Millerstown Chrysler dealership that was referred to in the GMA piece and AP article is where I bought my Dodge Nitro. It really is a shame. In the AP release, the customer that told the owner he was being closed before he even found out from Chrysler was actually me....haha.
Right. And most states passed laws that protected the dealer franchises which prevented the car manufacturers from doing this a long time ago. The only way to strong arm the dealerships into closing is a bankruptcy.
While it's sad to hear about dealerships closing from a standpoint of people losing jobs and another business shuttering their doors, I can see the sense of it also. The closing of the small dealerships that sold less then new 1 car a week (or other small number) could result in some serious savings in the management of the supply chain, staff needed to support these dealers, marketing and other materials that get sent to dealers, and a ton of other ways to tighten the purse strings on their expenses.
I think the impact from the dealerships closing will be minimal if at all on SiriusXM. People that still want their Dodge or Chevy will still go to a dealer to get one, just instead of visiting the dealership 3 miles away, they may have to go a couple extra miles.
When I look at the local area around me, GM for example with the Chevy dealships is excessive, I have over 6 of them within a 15 minute drive from my house. If the the little guy down the street closes shop thats sad for him and his employees to be sure, but I would of bought mine at the lot across town anyways that has a bigger selection on site, with a decent sized in house staff for servicing, etc that the little guy could never afford.