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Economy in Brief

Three Weeks Of "Cash for Clunkers" Program Spurs August U.S. Vehicle Sales To Highest Since May 2008
by Tom Moeller September 1, 2009

The U.S. government's "Cash for Clunkers" (CARS) program was in full force during the final three weeks of last month. The program gave car buyers up to $4,500 for trading in older, gas-guzzling vehicles if they bought more fuel efficient cars & light trucks. An estimated 700,000 clunkers were taken off the road (to be scrapped) and replaced by more fuel efficient vehicles. The program cost the Federal Government $2.877 billion. Indeed, the CARS program seems to have stimulated sales of new vehicles. U.S. unit sales of light vehicles during August jumped 25.4% m/m to 14.09M units which was their highest since May of 2008, according to the Autodata Corporation. (Seasonal adjustment of the figures is provided by the U.S. Bureau of Economic Analysis). August sales were indeed higher than the expected 13.2M sales rate. The question now is to what degree these sales borrowed from the future?

Sales of domestically made vehicles jumped 22.6% m/m to 10.02M units but they still were down 0.9% y/y. Sales of fuel efficient cars rose 28.0% m/m and that lifted them by 18.7% y/y. Light truck sales posted a 17.1% m/m gain that still left them down 16.3% versus last August. Year-to-date, sales of domestic vehicles overall are up 31.5% following last year's 35.8% drop from December-to-December.

Imported light vehicles similarly benefitted from the government's sales program. A 32.9% m/m rise to 4.08M units actually exceeded the sales gain for domestics and brought them up 18.1% y/y. Sales of imported autos rose by more than one-third from July and were at their highest level since last June. Sales of imported light trucks similarly rose by nearly one-third m/m and rose 16.7% y/y. Year-to-date sales of imported vehicles rose by nearly one-half following last year's 33.9% decline.

Overall, import's share of the U.S. light vehicle market rose to 28.9% last month after reaching 26.5% during all of last year. (Imported vehicles are those produced outside the United States.) Imports' share of the U.S. car market totaled 34.6%, versus 34.3% last year while the share of the light truck market was 21.4%, up from 18.3 % last year.

By maker, GM car sales in August fell 4.6% from last August but Ford's sales rose 24.9% y/y. Chrysler sales fell 13.0% but sales of Toyotas rose a strong 19.7%. Sales of Nissan autos jumped 38.4% while Subaru car sales soared 54.7%. Sales of the high-end Mercedes autos fell 17.5% y/y and sales of BMW's were off 16.3%. In the light truck market, GM's sales fell by nearly one-third y/y but Ford's sales increased 12.9%. Chrysler's truck sales fell 16.2% and Toyota truck sales similarly fell 14.6%. Sales of Nissan's light trucks were off by nearly one-half versus last August but Subaru's sales rose by nearly one-half.

The U.S. vehicle sales figures can be found in Haver's USECON database and the company sales figures are in the INDUSTRY database.

Economy to turn the corner in 2010 from the Federal Reserve Bank of Chicago is available here.

Light Vehicle Sales (SAAR, Mil. Units) August July June August Y/Y 2008 2007 2006
Total 14.09 11.24 9.70 3.9% 13.17 16.16 16.54
  Autos 8.05 6.20 5.04 18.7 6.71 7.58 7.77
    Domestic 5.26 4.11 3.28 18.7 4.42 5.07 5.31
    Imported 2.78 2.09 1.76 18.8 2.29 2.52 2.45
  Light Trucks 6.05 5.04 4.66 -10.9 6.47 8.60 8.78
    Domestic 4.75 4.06 3.78 -16.3 5.29 7.10 7.42
    Imported 1.29 0.98 0.88 16.7 1.18 1.47 1.37
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