Auto sales up in August, thanks to clunkers

By
Sharon Silke Carty, USA TODAY
September 1, 2009, 11:33 PM ET
2 min read

DETROIT -- The auto industry got a recession respite in August, thanks to the sales boost from the federal cash-for-clunkers rebate program.

In August, auto industry sales:

•Topped a million — a level for years considered routine — for the first time in 12 months, coming in at 1.3 million.

•Were 1% higher than August 2008, the first year-over-year monthly rise since October 2007.

•Were 26.5% higher than July, which benefited fully from cash for clunkers for only about a week.

Cash for clunkers ended last week, its $3 billion pot empty more than a month earlier than expected. It offered up to $4,500 for trading a qualifying older vehicle for a new, more fuel-efficient one.

The question now: Will a sales bust follow the boom? Sales cooled dramatically after the program ended Aug. 24, said George Pipas, sales analysis manager for Ford. He sees weaker sales for the rest of 2009.

"The economy is not sufficiently expanding to support the level of sales we had in August," Pipas said. Ford's f sales were up 17.2%, following a 2.4% rise in July.

Also, car shoppers can expect higher new and used vehicle prices for a while. Weak sales earlier pulled in few good trade-ins, and clunker trades had to be junked. That created a scarcity that's driven up wholesale used car prices 17.8% from December's historic lows, says big auto-auction operation Manheim. That, in turn, lets automakers cut new-vehicle incentives, which were down an average $290 vs. a year ago, says Autodata.

Cash for clunkers appears to have helped Asian makers more than the domestics, because Japanese and South Korean brands have more cars — which had stronger clunker sales — than trucks.

"Foreign automakers did pretty well ... as we thought they would," said Jessica Caldwell, senior analyst at Edmunds.com.

But not all clunker traders went for new small cars. Those who had trucks, SUVS and large cars could trade in their gas guzzlers for a similar vehicle with better gas mileage. Ford's F-150 trucks were up 12.8% in August, and the Chevrolet Equinox compact SUV was up 188.5%.

Despite General Motors' success with some models, total sales were down 20.1%, which GM attributes to having very strong sales in August 2008.

"We had a very tough year-over-year comparison," says Mark LaNeve, vice president of sales and marketing for GM. "Every other performance measure we feel very positive about."