Car Sales Rise in July, Helped by Rebates for ‘Clunkers’

Ford Sales Rise in July, Helped by Rebates for ‘Clunkers’
NY Times NICK BUNKLEY

DETROIT — The government’s “cash for clunkers” program gave automakers a desperately needed sales boost in July, though their relief could be short-lived if the Senate does not vote to extend the trade-in program after it unexpectedly ran out of money.

The Ford Motor Company said Monday that its United States sales rose 2.3 percent last month, marking the first year-over-year increase for any of the six largest carmakers since last August. Ford had not posted a monthly sales increase in nearly two years.

Ford, which heavily promoted the government-sponsored rebate program at its dealerships, in television ads and on its Web site, sold 18 percent more cars and crossover vehicles than it did in July 2008, though sales of its trucks and sport utility vehicles fell 18 percent. The company did not say how many of its sales were made to people who turned in a vehicle to be scrapped under the program.

“We had another strong month in progress before the ‘cash for clunkers’ program started,” Ken Czubay, Ford’s vice president for marketing, sales and service in the United States, said in a statement. “Our products, our dealers and our advance preparation enabled us to leverage the program and drive traffic and sales to another level. In addition, we achieved a sales increase even though we decreased incentive spending in an increasingly competitive environment.”

Other carmakers, including General Motors, Chrysler and Toyota, are scheduled to report their July sales later Monday.

The government trade-in program, which began July 24, lets consumers give up an older, inefficient vehicle and receive a credit of up to $4,500 toward the purchase of a new vehicle with a higher fuel economy rating. Its unexpected popularity caused the program, formally known as the Car Allowance Rebate System, to quickly exhaust its initial budget of $1 billion, which was enough for about 200,000 people to take part.

The House of Representatives voted Friday to provide $2 billion more, and approval from the Senate is needed to extend the program. Many dealers are now unsure whether to continue taking trade-ins under the program, not knowing if the government will reimburse them.

Automakers welcomed the program at a time when high unemployment and low consumer confidence levels have pushed new-vehicle sales to their lowest level since the recession of the early 1980’s. Through the first half of this year, sales were down 35 percent compared to the first half of 2008.

The Transportation Department said Monday afternoon that based on 80,500 cash-for-clunker applications — which officials believe is about a third of the total deals so far — average fuel economy of the new vehicles was 9.6 miles per gallon better than the old ones, 25.4 m.p.g. versus 15.8 m.p.g., an improvement of 60.8 percent. The improvement, the department pointed out, is much larger than the minimum required to be eligible for the government rebate: a gain of 4 miles per gallon for cars and 2 miles per gallon for trucks.

Part of the reason for the gain was that some people were turning in old trucks for new cars. So far, 83 percent of the “clunkers” were trucks or S.U.V.’s and 60 percent of the new vehicles were cars, the department said.

The department also said that Ford, General Motors and Chrysler supplied 47 percent of the new vehicles, slightly more than their overall share of the market, which is 45 percent. The top-selling new vehicle bought with the help of the rebate was the Ford Focus, and three more of the top 10 were also made by American companies, the department said. Of the remainder, it said, “preliminary analysis suggests that well over half of these new vehicles were manufactured in the United States.”