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December 7, 2004: 11:09 AM EST
NEW YORK (Reuters) - Automaker Toyota Motor Corp. will offer XM Satellite Radio Holdings Inc.'s service as a factory-installed option starting in 2006, XM said on Tuesday.
Customers buying Toyota and Lexus vehicles can opt to install XM radio, which like archrival Sirius Satellite Radio Inc. (Research) provide nationwide music, talk and sports programming for a monthly fee, before the car is shipped to a local dealer.
Separately, Sirius said that Toyota will offer Sirius as an option installed by local dealers, in nine models beginning in February 2005. Toyota will also expand the number of models selling XM (Research) as a dealer-installed option in 2005.
The installation of radios in new cars is seen as a key growth area for both Sirius and XM.
Shares of both XM and Sirius rose about 4 percent in pre-market trade on Tuesday. Stocks of both money-losing companies have recently traded at more than three-year highs, boosted by long-term optimism about the nascent market.
Sirius lags behind XM in subscribers and exclusive ties with automakers. XM has a head start in auto subscriptions with General Motors Corp. (Research), the world's largest automaker, offering XM receivers as an option on most new cars.
XM leads the market, with over 2.5 million subscribers, compared to about 800,000 at Sirius. But Sirius has grabbed more attention in recent months with the addition of radio industry veteran Mel Karmazin as its new chief executive and its plan to host Howard Stern's popular radio show in 2006.
XM and Sirius are expected to work hard to woo Ford Motor Co. (Research), the second-largest U.S. automaker, to factory-install their radios. Ford, whose dealers install the radios in some models if customers request it, has said it was looking at offering Sirius as a factory-installed option in future models.
XM shares closed at $37.73 on Monday, while Sirius shares closed at $8.09, after hitting a new 52-week high of $8.13 during the day.
Toyota to Factory-install XM Satellite Radios by 2006.
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