Mel Karmazin hasn't been the type to go begging to Washington, but the Sirius XM Radio (NASDAQ:SIRI) CEO may nonetheless benefit -- albeit indirectly -- from the ever-growing economic stimulus bill.

The Senate approved an amendment to the stimulus package that would temporarily make sales taxes and new auto-loan interest payments on cars and light trucks tax-deductible.

The addition's not a done deal, of course, especially since it would tack on another $11 billion to the stimulus plan's already mammoth cost. However, the move appears to have gained traction after the country's three major automakers posted horrendous January results yesterday.

  • Ford (NYSE:F) sales were off by 40%.
  • General Motors (NYSE:GM) took a 49% hit.
  • Chrysler suffered a 55% decline in sales.

It certainly makes more sense to stimulate buyers' interest than to simply hand bailout funds directly to manufacturers. If the amendment passes, it would give carmakers a little more fuel to get back on the road. Better yet, I'd argue that what's good for Detroit is good for Sirius.

Drive it home
Sirius XM needs new car sales to grow. Aftermarket sales have been stagnant. Sure, you may know a few radio buffs with portable Sirius or XM receivers, but the growing majority of subscribers arrive after snapping up cars with factory-installed satellite radios.

It's not a coincidence that Sirius XM began talking down its subscriber targets just as dealer showrooms grew eerily empty.

Back in September, Sirius projected a total of 21.5 million subscribers by the end of 2009. Two months later, it revised that target to 20.6 million. That figure may very well inch lower by the time that Sirius XM posts its fourth-quarter results later this month, especially given the recent decimation of new car sales.

Other factors since the latest update are likely to dent subscription totals, including:

  • The mid-November consolidation of dozens of music channels, spurring cancellations after some users found their favorite genre channels gone.
  • The upcoming rate hike for additional receivers under the same account; it will generate healthier margins from customers who stick around, but a few will naturally turn off their secondary systems.
  • The steadily worsening economy, which has forced even ardent satellite radio fans to slash their spending habits.

In a few years, dealership traffic won't be such a crucial part of subscriber growth. Folks will simply be trading one set of cars with factory-installed receivers for a new wave of similarly equipped vehicles. However, it's crucial right now, since roughly half of new car buyers become paying Sirius XM subscribers after their free trials run out, and consumer discretionary trends are facing some serious headwinds.

The future on wheels
What will Sirius XM do once every car owner who wants to subscribe to satellite radio is on board? Will its growth fade into static?

I doubt it. New generations of satellite radio will also be more lucrative for Sirius XM. Interoperable receivers are rolling out this year, allowing the company to offer both Sirius and XM to drivers. Don't be fooled by the "best of" packages available today, which only feature a few highlight channels rebroadcast on the rival's channels. These new receivers offer complete access to both XM and Sirius.

Receivers will also undoubtedly be more interactive in the future. Just as TiVo (NASDAQ:TIVO) owners can now use their DVRs to order pizzas, respond to advertising, stream Netflix (NASDAQ:NFLX) movies, or go shopping through (NASDAQ:AMZN), I suspect it's only a matter of time before satellite receivers cash in on their connections.

XM inked an ahead-of-its-time deal with Best Buy's (NYSE:BBY) Napster four years ago, laying the groundwork for satellite radio subscribers to purchase digital downloads of songs they like. Now technology needs to catch up, to make the transactions instant and seamless. I think that possibility's simply too lucrative not to become a reality.

Sirius has some huge financial hurdles to clear this year. Subscription growth will also be seriously tested. However, if giving automakers a jump-start is the first step toward fattening Sirius's subscriber base, I'm all in favor of getting this stimulus started.

More news than static on Sirius XM:

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Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius. He does not own shares in any of the companies in this story, save for TiVo and Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy is always in tune.