Assessing the Impact of "Clunkers"

The "Cash for Clunkers" car trade-in program became law in the U.S. in late June. It has sparked quite a bit of press coverage and interest and I have to admit it resulted in my first visit to an auto dealership in 3 years although I didn't close the deal.

The Clunkers program has resulted in a pretty substantial impact in interest in car dealers as shown by the Google search volume below (as always, click on any graph to get a larger view):

This shows the search volume since 2004 for my general "auto dealers" search terms in blue and then the search volume for "clunkers" in red. You will see in recent months, Clunkers appearing and growing exponentially. Then along with that interest, searches for auto dealers also picked up. In fact, search volume for auto dealers is at the highest level in August to date since 2006 which would be a substantial turnaround if it was sustained (which I don't think it will be). In a month or two, we will see how much of this interest is maintained.

Relating Search Volume and Auto Sales Data

Of course search volume does not necessarily translate to actual sales although in the case of auto sales I think search volume is an excellent indicator founded in the nature of how people search for and buy cars as I introduced in a post a while ago. Below you see the auto dealers search volume along with Seasonally Adjusted Annualized Rate(SAAR) auto sales from Autodata:

SAAR auto sales shown in red shows a pretty significant uptick in July that corresponds with an uptick in the Google search volume in July. It will be real interesting to see the August sales numbers to see if they continue to follow the Google search volume. If so, the August auto sales numbers could be back to early '08 levels which would be an incredible recovery.

Still too early to tell whether the Clunkers program is just going to be an outlier or lead into a sustained recovery but so far it looks to be having a substantial impact.
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