Are conversion rates still shrinking?
One of the more underrated metrics in picking apart Sirius XM’s prospects is its conversion rate. I’m not talking about the company’s penetration rate, because it perpetually expands its reach of new cars sold with factory-installed receivers. The real meat is in how many of the people who drive new cars off the lot ultimately subscribe to the service after their free trials expire. This has been trending lower lately, and hit a new low of 44.4% for the second quarter. In other words, just 444 of every 1,000 buyers of cars with satellite radios decided to activate their receivers as paying customers. A year ago, the conversion rate was a healthier 50.6%. The crummy economy is playing a part. Recent rate hikes aren’t helping. However, we’re also digging deeper into the mainstream, and these are unlikely to be the hard-core early adopters who log the kind of driving miles to justify a satellite radio subscription. The grim conversions are offset by the continually decreasing subscriber a
