Sirius Wheels

We all know that satellite radio rocks, but the platform rolls, too. Sirius (NASDAQ:SIRI) announced that it's extending its deal with DaimlerChrysler (NYSE:DCX) to exclusively provide satellite radio factory installations on various DaimlerChrysler brands through 2012.

Satellite radio has cuddled up with automakers since Sirius and XM (NASDAQ:XMSR) launched their digital radio services about three years ago. It's a natural fit, since most ardent radio listeners tune in while driving around.

DaimlerChrysler is an important partner for Sirius. The satellite radio provider expects the car manufacturer's 2006 model cars to deliver 750,000 new subscribers. That's plenty when you consider that Sirius has just 2.2 million subscribers at the moment. Its other deals with companies like Ford (NYSE:F) should further drive home even more new members.

Sirius and XM have carved up the auto market. Thanks to its ties with GM (NYSE:GM) and Honda (NYSE:HMC), XM claims to have the lead with 61% of the market. It's a vital part of the model, but let's not dismiss the importance of the aftermarket subscribers.

In my opinion, the folks walking into Motley Fool Stock Advisor pick Best Buy (NYSE:BBY) and making their own satellite radio choice matter the most. A factory installation can lead to wavering loyalty; new cars come with as much as an entire year of free service, but there is no guarantee that the car owner will continue the service once the bill comes due. Because most of the carmakers have exclusive deals with one of the two providers, if that prospective car shopper fancies a car with a factory-installed receiver from a rival service, jumping ship is as easy as swapping car keys. The retail customer, on the other hand, has the same right to switch out, but after making a decision and paying for a particular brand's receiver, he or she is likely to stick around longer. Sirius claims to have the market lead on that front, though XM currently has twice as many total subscribers as Sirius does.

So keep motoring, satellite radio. Just make sure you stop for hitchhikers -- especially if they're thumbing a ride home from their local electronics superstore.

Lend your ears for further Foolishness:

• Rival XM's growth is looking dubious.
• With Howard Stern getting Sirius, his replacements look less than stellar.
• XM strikes a Fox-y deal.

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Longtime Fool contributor Rick Munarriz is a Sirius satellite radio subscriber. He does not own shares in any of the companies in this story. The Fool has a disclosure policy. He is also part of the Rule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.