The $1 billion “cash for clunkers” program gave automakers, led by Ford Motor Co., a significant sales boost in July. Now the question is whether funding for the incentive will continue.
Thanks to a wave of trade-ins, Ford in July posted its first monthly sales increase for U.S. sales in more than a year and a half.
Other automakers also appeared to benefit from the trade-in stimulus, but not necessarily to the same degree. Honda Motor Co., for example, said its sales declined 17 percent in July. That’s still a marked improvement over previous months; year to date, Honda is off more than 30 percent.
Toyota Motor Corp. saw its sales decline by 11 percent in July, compared with a 34 percent decline for the first seven months of the year, while General Motors Co. had a 19 percent decline, far better than its 38 percent decline year to date. Chrysler Group LLC posted similar improvements, with sales down just 9 percent on the month.
Meanwhile, Hyundai Motor Co. saw a 12 percent sales increase over July 2008, in large part because nearly all its vehicles qualify for the cash-for-clunkers program and because the vehicles have relatively low price points.
Michael DiGiovanni, lead sales analyst for GM, said that the program added about 115,000 sales to the market, and on an annual basis could bump up U.S. sales by more than 1 million units.
“Clearly, this has been a big boost to the economy,” he said.
But the jolt that the incentive program has given to auto sales could be short-lived. Because of strong response, government officials are concerned that the $1 billion appropriated to the program could run out soon.
The House voted last week to appropriate an additional $2 billion for the program, but the Senate has not voted on the measure.
White House press secretary Robert Gibbs said Monday that the program would last to the end of the week, but he said that without Senate action, he could not make the same guarantee he made last week to assure next weekend’s auto shoppers that the $3,500 to $4,500 government rebate still would be available.
“If the Senate hasn’t acted by … this Friday, I would not give people the same assurances of going into a dealership this weekend,” Gibbs said.
President Barack Obama will push Senate Democrats to approve that legislation Tuesday, Gibbs said.
For July, Ford sold 158,838 cars and light trucks, a 2 percent increase in new-vehicle sales over a year ago, which broke a streak of 19 monthly declines. GM, emerging from bankruptcy last month, sold 189,443 vehicles, while Chrysler sold 89,900.
Ford said it was seeing a slight uptick in sales before the clunkers program officially opened July 24, but that they greatly increased thereafter. The program, which offers rebates to consumers who trade in older autos for new vehicles that meet certain fuel economy standards, has been highly popular.
Honda’s top-selling vehicle for the month was the compact Civic, with 30,037 deliveries, a 3.1 percent year-over-year increase. Sales of the CR-V crossover were up nearly 10 percent, with 19,151 being driven off lots in July.
“Strong interest from the [cash-for-clunkers] program increased dealership traffic late in the month and contributed to Civic and CR-V sales gains,” said John Mendel, executive vice president of Honda’s U.S. sales operations.
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Early analysis of the program found consumers opting for vehicles that deliver higher mileage, with a 15.8 m.p.g. average fuel economy rating for trade-ins, compared with an average of 25.4 m.p.g. for the new cars being purchased. The Ford Focus compact car was the most frequently purchased vehicle, Obama administration officials said.
If funding is extended on the program, it could prompt many more sales and potentially tip the industry as a whole back into growth, industry experts said.
Through June, the industry was running roughly 30 percent below its 2008 levels.
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