We now have the seasonally adjusted annual rate of auto sales (saar) for August and it shows that cash for clunkers (c4c) was likely a big failure. This failure, however, won't prevent it from ending the technical recession.
The saar for August came out to 14.1 million units, which while a huge number, was at the lower end of the expected range and more importantly essentially dismissed the notion that c4c was leading to a bunch of non-c4c sales. We know that c4c generated about 700,000 sales and that approximately 2/3 of those sales (actually more than that, but for the sake of argument I will use 2/3) took place in August, so c4c added 462,000 sales in August or roughly 5.5 million saar. Now, it is likely that some of those sales would have happened without c4c, but as you can see that 14.1 million saar doesn't look like it would have been a lot different than June's 9 million saar without c4c. This displays that c4c didn't restart auto sales, only that c4c in fact pulled demand forward by offering an incentive that people (who were going to buy soon anyways) couldn't pass up. So the notion of spurring additional sales/dealer traffic is bunk for now. Look for September's auto sales numbers on the first of October for a better read on where we are really at with auto sales.
Having said all of the above, c4c will be a large contributor to what will be a positive print on Q3 GDP (I am looking for 3%+) and another positive in Q4, as the need to rebuild inventories from the c4c depletion and the general restocking for Christmas (which usually takes place over time, but will now be pushed into Q3/4 as retailers haven't been restocking due to poor demand). This means that the technical recession will be over by no later than the early 3rd quarter and I would look for an NBER call to come late Q4/early Q1 2010 and date the recession end to sometime in either July or August. This does not mean we are out of the woods though, as if consumer demand doesn't return, the inventories that were rebuilt in Q3/4 of 2009 will still be sitting on the shelves in 2010, which will be a drain on GDP. While I am looking for nice GDP growth for the second half of this year, I am not so upbeat on 2010 and currently look for something between .5% and 1.5%.
Link to breakdown of auto data (when updated).