@Risk

Yesterday, SupplierBusiness released its Automotive Confidence Index, which regularly takes the temperature of the industry from the front line, ahead of other sales and performance statistics.

Taken each quarter, the index covers four key areas:

• new orders
• inventories of finished products
• overall inventories
• employment levels

This latest index, representing the three-month period from May to July, shows encouraging signs of confidence returning to the industry. For instance, even though the number of suppliers reporting declining orders hasn’t changed, the number of new orders increased –particularly in Europe, where there was a 13.8 point rise. That trend even held in North America, where new orders increased 3.9 points.
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The N.Y. Times reported today that the secretary of transportation and the Senate majority leader both feel confident that the Senate will vote this week to revive the “cash for clunkers” program with an infusion of another $2 billion in funding, as the House did a few days ago.

If you haven’t heard already, the Car Allowance Rebate System (CARS) –popularly known as “cash for clunkers” –is a program designed to boost the U.S. auto industry while helping consumers trade in cars with low mpg ratings. Consumers can scrap their gas guzzlers in exchange for a credit of up to $4,500 toward the purchase of a new, more fuel efficient vehicle.

CARS was rolled out in late July, but in less than a week, the program burned through the $1 billion Congress had appropriated. Now, cash for clunkers is essentially stalled until both the House and Senate can approve more funds.

Some see the overwhelming success of CARS as a welcome sign of underlying demand among U.S. consumers.

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