Auto lending activity increased in the South in July and August, according to the Federal Reserve’s Beige Book released this afternoon.
According to the Dallas Fed, “Some contacts reported an increase in demand for auto loans, saying they were unsure how much of it was a result of the cash-for-clunkers program.” Overall, the Dallas Fed said, “There were scattered reports of improvement in loan demand over the past six weeks, although contacts remain cautious about the future.”
Mortgage activity improved in the Dallas Fed’s region, although commercial real estate loans did not. The Dallas Fed’s district consists of Texas, northern Louisiana and southern New Mexico.
Overall, the Beige Book reported that the US economy firmed in July and August.
The Dallas Fed seems a bit hesitant to draw a link between CARS and the “improving” Dallas auto market. Let me take a stab. Any demand growth, such as it was, was pulled forwards by the government cash allowance and not by some organic need to buy a car at this time. I suppose this was the plan, but watch sales drop like your grade in college French come September and October when the incentives are exhausted.
Without going in the host of funding disasters connected to CARS, I think it is fair to say that CARS was a failure, unless we define success as the transfer of money from tax payers to bond holders, car dealers and auto customers, with no hope of long term economic improvement in our industry.
Howard, that’s good additional color. Thanks.