The value of motor vehicle output in GDP is a broader concept than domestic physical unit production because, in addition to the assembly of new motor vehicles, it also includes the value added from the retail and wholesale margins (including sales taxes) for new, used, and imported vehicles.  Also, unit production data counts all vehicles equally, whereas motor vehicle output reflects the mix of vehicles weighted by their prices.

 

The third-quarter increase in real motor vehicle output was mainly accounted for by an increase in truck output.  The major factors contributing to the increase were:

 

  An increase in nominal (current-dollar)  truck sales.  Even though the increase in unit sales was more than offset by a decline in unit inventories, the increased sales contributed to the increase in motor vehicle output because of the value added by retailers and by wholesalers.

 

  An even larger increase in real (chained dollar) truck output.  There was a large drop in the producer price index used to deflate nominal truck sales to businesses and truck inventories, resulting in an increase in real truck output larger than the increase in nominal output.

 

  An increase in the margins on used motor vehicle sales in GDP.  There was an increase in sales of used motor vehicles, and BEA counts the value added (wages and salaries, commissions, etc.) associated with those sales.

 

   An adjustment for net exports.  BEA uses balance of payments data for nominal and real exports and imports, and the contribution of net exports was larger than that implied by the unit production data.

 

In the third quarter, all of these factors moved in the same direction, boosting real output relative to physical unit production.

 

 

Published