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Toyota Cuts Deals for Satellite Radio

Automaker to Offer XM and Sirius Subscription Services

By Annys Shin
Washington Post Staff Writer
Wednesday, December 8, 2004; Page E05

In the latest battle for distribution and subscribers, XM Satellite Radio Inc. and its rival Sirius Satellite Radio Inc. yesterday announced separate deals with Toyota Motor Sales U.S.A. Inc.

Toyota is expanding its relationship with XM Satellite Radio and will offer the subscription radio service as a factory-installed option in a select number of 2006 Toyota, Lexus and Scion vehicles.

Sirius or XM Satellite Radio will be optional on some Toyota, Lexus, Scion, Camry and Land Cruiser models. (Reed Saxon -- AP)

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Toyota also announced it will offer Sirius Satellite Radio in nine models, including the Camry, Land Cruiser, and three models each of Lexus and Scion, starting in February, to be installed at the dealer or at the port of entry.

XM's deal with Toyota "solidifies XM's leadership position" in the automotive market, said XM spokesman Chance Patterson.

Sirius spokesman Jim Collins said the deals are "great news for both of us."

News of the deals sent shares of Sirius climbing 11 percent, to close at $9.01, while shares of XM closed up 1.8 percent, at $38.41.

Both radio services offer commercial-free music, talk, news, weather and sports for a monthly fee.

District-based XM has 2.5 million subscribers; Sirius has more than 800,000.

With 17 million new vehicles hitting the roads each year, analysts and XM and Sirius officials have long contended that the auto market is the key to subscriber growth for both companies, which still post quarterly losses.

XM has an exclusive arrangement with General Motors, which owns a 5.2 percent stake in XM. The automaker offers XM as a factory-installed option in its vehicles. GM has built 1 million vehicles with XM radios, Patterson said. Honda, another XM investor, offers XM as a standard feature in select models. This year, Honda agreed to double the number of XM installations in 2005 to 400,000 vehicles.

During the past year, Toyota offered XM as a dealer-installed option on nine models, or in about 20,000 vehicles, said Jim Pisz, Toyota's national manager of advanced technologies. Patterson and Pisz said they did not yet know how many 2006 Toyota vehicles will carry XM under the new deal.

Sirius, based in New York, has its own exclusive deal with DaimlerChrysler AG to offer Sirius as a factory-installed option in select models. Sirius officials said they expected the arrangement with Chrysler to generate about 500,000 new subscribers over the next two years. Sirius is also available in select BMW and Ford models.

Collins and Pisz did not yet know how many 2005 Toyota vehicles will carry Sirius.

Nissan, Infiniti and Audi offer both satellite radio services, Patterson said.

Sirius is offering financial incentives to franchises of United Auto Group Inc., the second-largest publicly traded auto dealer in the United States and a major Toyota dealer, said Janco Partners analyst April Horace. As a result, "the United Auto Group will be more likely to have Sirius," she said. Right now, customers don't know enough about satellite radio to care, said some local Toyota dealers.

"I don't think the customers know enough about it yet," said David Reynolds, general sales manager at Jack Taylor Toyota in Alexandria.

"I have not gotten many requests for satellite radio," said Melvin Mullings, sales manager for 355 Toyota in Rockville.

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