Cash for Clunkers Produces Auto Sales Spike in August

Cash for Clunkers produced a big, temporary blip in U.S. auto sales for August, as opposed to a lasting recovery, analysts said.

Still, post-"Clunker" auto sales for the rest of 2009 should be a modest improvement over the first half of this year.

"Now that cash for clunkers is over, we believe that the debate will center on the impact of a potential pull forward effect on auto sales in the next few months," said Brian Johnson, auto industry analyst for Barclays Capital, in a note for investors last week.

Pull-forward means Cash for Clunkers motivated some sales in August that would have taken place in later months, so sales for those months will be lower than they would have been.

Johnson predicted a seasonally adjusted annual sales rate of 15.8 million for August, by far the highest SAAR so far this year. For the balance of the year he said auto sales should range from 10 million to 10.5 million SAAR, with sales for all of 2009 of around 10.5 million.

Automakers are expected to report U.S. auto sales for August tomorrow, Sept. 1.

Separately, last week Edmunds.com predicted an August SAAR of just over 13 million. That would still be a high point for 2009, since the SAAR failed to exceed 10 million at all in the first half. The SAAR for July was 11.2 million, according to AutoData Corp.

"Cash for Clunkers sent the sales rate on a wild roller coaster ride," said Jessica Caldwell, senior analyst for Edmunds.com. Based on online shopping data, Edmunds.com said the SAAR for late July topped 19 million, thanks to Cash for Clunkers, then fell to around 15 million in early August, to around only 8 million in late August.

"Ending August on such a low note does not bode well for September," Caldwell said.