'Cash-for-clunkers' gets credit as car sales skyrocket in July
DETROIT -- For months, automakers have predicted pent-up demand was brewing for cars as sales hit record-low numbers. And the government's cash-for-clunkers program may have proved them right.
July sales — coming in at 997,824 — didn't quite reach the 1 million mark, a sales rate that used to be the norm but hasn't been since August 2008. But it was the best rate of 2009, up 16% from June.
Consumers were waiting on the sidelines for a deal such as clunkers to come along, says Mark LaNeve, vice president of North American sales and service for General Motors. GM's sales were down 19.4%. "This has been rumored for months and widely reported that it was going to be retroactive to July 1," says LaNeve, pointing out that many people waited until the program was in place before finalizing car deals.
But now that the initial rush is over, it could take months to go through any more money that may be allocated, he says. "You're going to start running out of people" who have a clunker to trade in and can afford a new car, he says. Congress had allocated $1 billion to the trade-in program, officially called the Car Allowance Rebate System, or CARS. That money has run out, and President Obama has asked the Senate to put another $2 billion into CARS by Friday. The House already passed a bill adding money to it. The program's fate hangs on whether the Senate will vote to extend more funds this week.
"It's good for consumers. It's good for dealers and auto manufacturers," White House spokesman Robert Gibbs said. "It's good for our energy security and our environment."
But some Republican senators, such as Majority Leader Mitch McConnell, R-Ky., have questioned rushing to inject more money into the industry.
Whether cash-for-clunkers can take credit for the sales strength is up for debate, says Edmunds.com CEO Jeremy Anwyl. Sales would have gone up in July anyway as buyers took advantage of model year closeouts, he says.
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