Via Satellite - April 2007

Automobile/Truck Manufacturers Aligned with XM

Automobile/Truck Manufacturers Aligned with Sirius

Acura Audi Buick Cadillac Chevrolet Freightliner GM Infinity Isuzu Lexus Nissan Pontiac Toyota Volkswagen Saab Honda Porsche Saturn Subaru Suzuki

Aston Martin Audi BMW Chrysler DaimlerChrysler Dodge Ford Infiniti Jaguar Jeep Land Rover Lincoln Mini Mazda Mercedes-Benz Mercury Monaco Nissan Volvo

year, representing 55 percent of OEM net subscriber growth in the satellite radio industry. “Our goal for 2006 was to double our OEM subscriber base and we more than accomplished that goal,” James Meyer, president, sales and operations for Sirius, said in the company’s February earnings call. “Sirius started 2006 with 823,000 OEM subscribers and ended the year with more than 1.9 million subscribers in this important channel. Factory programs continue to gain momentum. Sirius ended 2006 with 132 individual vehicle model factory programs and 149 total vehicle model programs. OEM economics will continue to improve and our penetration rates continue to increase.”

Chrysler is targeting a 40 percent overall penetration rate for the 2007 model year with Sirius factory programs, compared to 30 percent in 2006. During the fourth quarter, the Chrysler Group launched a national media campaign featuring Sirius in TV spots

for Chrysler, Dodge and Jeep vehicles. “This national exposure was not only great for our brand but also had a very positive impact at the dealer level. Awareness of the Sirius option at the consumer and dealer levels has never been higher,” says Meyer.

Ford now has Sirius as a factory-installed option in 22 vehicle lines, compared to four at the beginning of 2006. Volkswagen and Audi began their 2007 model year launch of their previously announced exclusive partnership with Sirius, and the two manufacturers are targeting an 80 percent installation rate. Mercedes-Benz now installs Sirius radios in more than two-thirds of all model year 2007 vehicles.

“On the OEM side we have learned a lot,” Meyer says. “I am afraid we have not learned as much as our counterparts have, but we are working very hard at it. … We are learning more and more to be both integrated with the factory or a part of how the mother

company goes to market with their merchandising and their campaign. I think we have made great progress there with both Chrysler and Ford.

“The dealer does play a very important role in retention rate,” says Meyer. “First and foremost, just making sure the consumer knows he has the service, so we are very focused on that now. We have added a group in Detroit that is fully focused on working with the dealers and working with how we communicate with the dealers to improve our retention rates.”

While Sirius is trying to close the OEM gap, XM continues to make moves as well. The satellite operator recently announced an extension of its relationship with American Honda until 2016 and projects production of 650,000 new units in 2007. “The roll-out of XM in our vehicles has been one of the fastest in the car industry and over the years XM has become an increasingly important entertainment service to our customers,” says John Mendel, senior vice president, automobile operations of American Honda Motor Co. Inc.

XM followed that deal with an extension of its agreement with Toyota to be the sole provider of factory-installed radio equipment until 2017. XM estimates that 1 million new radios will be installed in Toyota and Lexus vehicles by 2010. “XM provides exceptional entertainment programming and innovative data services like real-time traffic, recently launched on the all-new Lexus LS. Our agreement with XM will help us continue to provide these services and develop additional in-vehicle applications for future products,” says Dave Danzer, group vice president of strategy and product planning for Toyota Motor Sales U.S.A.

In 2007, GM will produce 1.8 million XM-equipped vehicles, Honda will produce 650,000 and Hyundai is moving toward factory equipping 100 percent of its vehicles with XM by late 2007, says Davis. In 2008, Nissan has projected it will turn out 500,000 factory-installed XM vehicles.