XM Marks the Spot

XM Satellite Radio Inc. is looking at franchised car dealers as a way to expand its availability beyond primarily General Motors Corp. vehicle owners. In return, XM says dealers can profit from selling its aftermarket products.

“The bottom line for dealers is that there is a lot of money to be made,” says Rocco Tricarico, XM's product marketing director. “It's easy to install and our customers love it.”

He's referring to an aftermarket device called XMDirect. The size of a sandwich, it interacts with a growing list of factory-installed sound systems and converts their receivers into XM receivers.

It's essentially a universal tuner box that acts like a translator. Paired with a digital adaptor, “it teaches other factory-installed units to become XM units,” says Tricarico.

XMDirect has been available at BMW and Mini dealerships since 2003.

Starting this summer, Ford Motor Co. and Chrysler Group dealers will be able to offer customers who buy vehicles with Sirius Satellite Radio capability the ability to get XM service instead. Both XM and Sirius are installed as standard equipment on many different models. Activation depends on the vehicle buyer electing to subscribe.

XM is an independent company. But its growth has been primarily driven as a GM feature. GM is a major XM investor.

Sirius, meanwhile, is aligned primarily with Ford and DaimlerChrysler.

Both XM and Sirius provide nationwide music, talk and news channels to customers who pay monthly subscriber fees. Sirius says DaimlerChrysler is installing its radios in more of its vehicles. That's expected to hit 555,000 units in two years.

XM hopes XMDirect lures customers from Sirius. In addition to developing adaptors for BMW, Chrysler and Ford vehicles, XM is coming out with adaptors that will convert aftermarket radio units.

XMDirect retails for about $400. A dealership would typically take 20 minutes to install it, and make about $200 off the deal, says Tricarico.

“The response from dealers has been overwhelming,” says David Butler, XM's corporate communications director. “The dealer-installed products are an interesting niche for us.”

The company also offers XMCommander which works on any vehicle with an FM radio. “It's an attractive option for dealers because they can offer it to customers buying pre-owned vehicles of any age and brand,” says Butler.

About 50% of XM radios are factory-installed in vehicles, Butler says. About 75% of those systems are activated upon vehicle buyers becoming XM subscribers. Less than 1% voluntarily unsubscribe, Butler says.

For $9.99 a month, XM's satellite radio offers 121 channels, 68 of which are commercial free.

XM says it currently has about 1.6 million total subscribers. It's projecting 2.8 million subscribers by year-end, and says 20 million is possible by 2010. Sirius, launched a year after XM, forecasts 1 million subscribers by year's end.