Life After 'Clunkers' for Best-Selling Cars?

Aug. 10, 2009— -- They've been tops on government lists for "Cash for Clunkers" sales, but do cars like the Toyota Corolla and the Ford Focus have what it takes to maintain their success after the program ends?

That may depend on how you define success. While sales of these cars look certain to drop in the near-term, experts say, their low cost will give these small, gas-powered vehicles an edge for years even as the market becomes more crowded with hybrids and electric cars.

"Assuming gas isn't $10 a gallon, your small, gasoline engines are what the lower to middle class is going to be looking at," said Stephen Spivey, senior auto industry analyst with Frost & Sullivan.

Under the wildly popular "Clunkers" program -- known officially as the Car Allowance Rebate System or CARS -- consumers who trade in old gas guzzlers receive between $3,500 and $4,500 toward the purchase of more fuel-efficient, often smaller cars.

The high gas mileage and relatively low cost of the Corolla and the Focus, experts say, helped catapult them to the top of the government list of vehicles sold under the program. The base models for both cars, before options packages, cost less than $16,000 and both get 35 mpg on the highway.

Name recognition helped too, said Brian Moody, a senior editor at Edmunds.com.

"I think when people think what small car do I want, I think cars like the Ford Focus, the Toyota Corolla and the Honda Civic" -- which ranked no. 3 on the DOT's best-seller list -- "are the first ones that just jump to mind," Moody said.

"There are other cars that would qualify and that are small and affordable, but I think those are the three that the average person just kind of gravitates to because that's what's known."

The Corolla and the Focus were dueling for first place under the program. Initially, the Focus emerged as No. 1 on a top 10 list of most cars sold, according to the Department of Transportation. But rankings released last week showed the Corolla had knocked the Ford car down to second place.

Some 7,000 Corollas were sold in the first week of the program, from July 24 to July 31, according to Toyota. Ford said it didn't have comparable data to release on Focus sales, but reported total July Focus sales of 15,700.

Not everyone agrees with how government devised its Clunkers' rankings. Edmunds.com recently released its own sales rankings listing the Focus at No. 2, the Civic at No. 6 and the Corolla at No. 9. Pick-up trucks took up several top spots.

But Edmunds.com analyst Michelle Kreb also noted that, even before Clunkers, trucks were a popular purchases following traditional trade-ins. Now they seem to be losing some ground to small cars.

"Participants in the program are choosing more fuel-efficient vehicles. Before, cars were only two of the top 10 vehicles purchased with clunker trade-ins; now, six are cars," Krebs said. "Interestingly, all buyers, regardless of trade-in, are opting for smaller, more fuel-efficient cars at a higher than usual rate."