To put today’s auto numbers, which we talked about here, in perspective, I’m going to use this chart from Calculated Risk Blog’s write-up of today’s auto numbers:
Remember the Car Allowance Rebate System, or what was known as “Cash for Clunkers”? Here’s a White House report discussing its impact on GDP, summarizing the program as follows: “The program provided $3,500 or $4,500 bonuses to buyers who traded in light motor vehicles with mileage ratings of 18 miles per gallon or less, who purchased a new car or truck with an improved mileage rating, and whose trade-ins and new purchases met certain other criteria. In order to get the maximum amount of $4,500, the mileage had to improve by 10 mpg for new cars and 5 mpg for new light trucks.”
The program ended up selling a number of cars, 14.2 million, that we haven’t seen since. Until this month’s 15.1 million. The economy appears to be capable of sustaining auto sales at Cash for Clunkers level, provided no sudden changes are made to aggregate demand.