The satellite radio market got a boost this week, as Toyota (the fourth largest automaker in the U.S. behind GM, Ford and Chrysler) announced this past Tuesday that it has selected XM Satellite Radio for factory-installations starting from 2006.  XM (Nasdaq:XMSR) already had an existing relationship with Toyota, in which the Japanese car manufacturer was offering XM as a dealer-installed option.  Another part of the deal is that Toyota also selected XM as its supplier for data services, such as XM’s NavTraffic real-time traffic information service.  The number of models offering XM as a dealer-installed option will increase in 2005, with new models such as the Toyota Avalon and the Lexus GS 330 being added to the already existing 10-model lineup. XM also has partnerships with Honda and GM.

On the same day, SIRIUS (Nasdaq: SIRI) also announced that Toyota has selected SIRIUS as a post-production (dealer installed) option beginning in February 2005 for the 9 models on which Toyota is already offering XM as a dealer-installed option.  It is widely believed that this deal came as a result of Sirus' relationship with Penske, the largest owner of Toyota dealerships in the U.S.  While the Toyota deal was a positive for Sirius, factory-installations still are the holy grail, and typically drive a substantially higher volume of activations, making things more difficult for the company to replace XM.  Moreover, XM is better entrenched due to the NavTraffic (the real-time traffic information service) portion of its deal with Toyota.  The company already offers NavTraffic on the 2005 Acura RL model, with service currently available in 20 U.S. metropolitan areas.