Wall Street Greek: Motor Vehicle Sales See Clunkers

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Motor City marquees today's business wire, as monthly motor vehicle sales hit print later today. The government's CARS program, affectionately known as "Cash for Clunkers," should have played a significant role in August sales, and we will get a look as the day rolls forward.

The Midwest plays sideshow today, with yesterday's reporting of the Chicago PMI and today's ISM Manufacturing Index release garnering attention. Bloomberg radio interviewed several big name talking heads this morning, one of which noted the long-term handicap borne by parts makers. General Motors (NYSE: GM) may have bailed out a few of its key suppliers with its fresh government print, but a great portion of the car you drive today is not actually made at the auto plant, but assembled there. The still starving parts makers need to consolidate, and according to today's guest host with Keene and crew (feel free to offer the gentleman's name via comment link below), that could take as long as eight years of parts makers' pain and suffering.

Motor Vehicle Sales Marquee

Today's reporting of August Motor Vehicle Sales is seen showing a significant lift from "Cash for Clunkers." Bloomberg's survey of economists forecasts an annual sales pace of 10.5 million, versus the 8.3 million seen in July. July's sales, which also saw benefit from CARS, posted a significant increase over June's rate (+15.8%).

Barron's reported that foreign auto makers benefited most from "Cash for Clunkers," and somewhere in some Detroit dive bar an unemployed assembly-lineman grumbles, "That figures!" and downs another shot of high octane. Still, according to Barron's, Detroit's Big-3 took in approximately 39% of the proceeds (or sold that percentage of the approximately 700,000 cars that are believed due to the program). Toyota (NYSE: TM) sold 19.4% of them all by itself! Asian car makers sold 41%, but that was unavoidable, as the still surefooted Asian car makers with their intact-brand value had a special advantage this summer. Let's not forget Ford though (NYSE: F)...

The concern going forward is whether the CARS program simply pushed forward sales that might have occurred anyway over the next few months. Surely that's the case for some, but we suspect the "clunkers" aspect of the program worked to inspire sales that were not in queu. People turned in their still running junk-mobiles and received a $3,500 to $4,500 credit toward their new vehicle. That would not serve the trendy spend thrifts who change their car every year and are therefore already driving fuel efficient vehicles.

Will car sales dip in September anyway? Seems likely, as the economy recovers at a slow grind and the number of credit constrained, cash starved and jobless still loom large.