The satellite-radio giant is teaming up with Penske Automotive Group (NYS: PAG) to get buyers of used cars free trials of the premium service. Penske will offer three free months of Sirius or XM service to buyers of used cars with factory-installed receivers.
This isn't the first time Sirius XM has warmed up to dealers of used cars with incentives to push radio subscriptions. However, every deal is incremental.
Penske's empire will reach out to prospective satellite-radio subscribers through 154 franchises at 119 dealerships.
Sirius XM doesn't have much of a choice. Despite distractions over Liberty Media's moves, the satellite-radio provider needs to keep growing to keep shareholders happy. Adding new subscribers is obviously a major component of that strategy, and that matters even more since January's price increase. A new subscriber is now worth more to the company than before its 12% rate boost.
Are used-car buyers better than new-car buyers? In theory, it probably doesn't seem that way. Folks turn to secondhand drives to get more bang for their buck, and that makes them less likely to spring for satellite radio. However, cost-cutting drivers are also probably not buying smartphones or snapping up newer cars that integrate seamlessly with Pandora (NYS: P) , giving them fewer audio options outside terrestrial and satellite radio.
Sirius XM knows what it's doing.
Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.
XM Satellite Radio was a Rule Breakers recommendation before the Sirius XM merger. It's now gone from the scorecard, but if you want to discover the newsletter service's next Rule-Breaking multibagger, a free report reveals all.
At the time thisarticle was published The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns shares of Liberty Media and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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