Monday, April 11, 2011

Will Sirius (SIRI) Get Boost from (F) (GM) (HMC) (TM) April Incentives

As the auto industry goes so goes Sirius (NASDAQ:SIRI), as Ford Motor (NYSE:F), General Motors (NYSE:GM), Toyota (NYSE:TM) and Honda (NYSE:HMC), among others, are rolling out incentives after a slower March.

Most of the auto companies cut back on incentives in March to protect margins and earnings, and even though they enjoyed a better month than the year and month before, there were signs of slowing down.

Concerns over how consumers will respond to the rising price of gas, which could result in them holding on to their tax returns rather than spend their money, is also a major reason for boosting incentives again.

Parts shortages also weigh on the industry, as ongoing concern about the real depths of the crisis have many doubting how much supply is really there.

All of this doesn't matter for Sirius, in the sense that whatever the real situation is, it will manifest itself no matter what the auto industry communicates.

This will either push up sales or it won't. There are either enough parts or there aren't. While we don't know it, and it makes it hard to make investing decisions, we'll just have to watch closes and wait it out to see where sales really are standing.

Incentives will do nothing if some of the sales can't be made because the cars aren't being built. And that could play out for a couple of months, and we still have aftershocks in Japan which are a legitimate threat.

As to the cars that are available for sale, the high gas price issue is still a key factor, as mentioned, and that won't be entirely overcome if consumers are convinced they need to protect their capital in case of emergency situations. That happened when gas prices rose not too long ago, and it is approaching the numbers where it could do it again.

Sirius shareholders and potential investors are pretty much held captive at this time until this unfolds, unless they want to take a big risk. Now it's shooting craps though, and there is no certainty which way things will go.

Sirius closed Friday at $1.76, even with Thursday's close.

2 comments:

Unknown said...

They will hold on to their tax returns. I think they must file no matter US car sales. What a maroon.

Anonymous said...

I think he means they will hold on to the money they received back from the government rather than spend it on a new car.