Another automaker is showing Sirius XM Radio
Hyundai Motor America will be giving buyers of Hyundai Certified-Pre-Owned vehicles with factory-installed satellite receivers three free months of XM service. Sirius XM has been striking deals with automakers including BMW and Volvo since 2009. Used car superstore CarMax
Car manufacturers have been giving new-car buyers a taste of satellite radio for years, hoping to score royalties from Sirius XM for those that stick around as paying subscribers after their introductory taste tests expire. Now that more of the first wave of cars with factory-equipped receivers is being traded in, pushing subscriptions to new buyers just makes sense. Hyundai began offering XM as a feature six years ago, so many of the cars waiting to be resold have dormant receivers just dreaming of a shot at reactivation.
The used-car market may never be as lucrative as new rides. A driver opting for a used car is looking to get more bang for his buck, and that may include not paying a premium for audio entertainment. Older cars are also less reliable, so few will be forking over money for lifetime subscriptions or pre-paying for several years of Sirius or XM service. Sirius XM hasn't discussed whether conversion rates are higher or lower on these pre-owned receivers, but I would be on the under if I were you.
Things will also get interesting in the coming months as new cars begin upgrading to Sirius XM 2.0 receivers. Will used-car buyers feel that they're being cheated with the first generation of receivers, especially if Sirius XM plans to charge the same for both platforms?
Then again, Sirius XM will likely be raising its rates come January. There's never a dull moment down this road.
Should Sirius XM charge more for its Sirius XM 2.0 receivers that will have 25% more content? Share your thoughts in the comment box below.
Longtime Fool contributor Rick Munarriz is a subscriber to Sirius since 2004. He does not own shares in any of the stocks in this article. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.