Cash for Clunkers program lifts Ford, but not GM, Chrysler

Some automakers blame low inventories for shortfall By Martin Zimmerman • LOS ANGELES TIMES • September 2, 2009 Ford Motor Co., boosted by the wildly popular Cash for Clunkers program, reported a 17 percent increase in August sales compared with a year ago, but Detroit rivals Chrysler Group and General Motors posted lower results for the month. Chrysler said its August sales fell 15 percent compared with a year earlier to 93,222 vehicles despite the Cash for Clunkers push. Chrysler said low inventories of several popular Chrysler, Jeep and Dodge models contributed to the shortfall. GM said it sold 246,479 cars and light trucks last month, down 20 percent from a year ago when the car manufacturer's numbers were helped by heavy promotions and special pricing. At other carmakers, Nissan's monthly sales fell 2.9 percent; Toyota's climbed 6.4 percent; and Honda's also advanced, rising 9.9 percent. Call the monthly results very much a mixed bag, but for some auto analysts it was still a silver lining to what had been a dismal sales year before the generous federal Cash for Clunkers incentives started five weeks ago. "It was a big success," said Erich Merkle, president of Grand Rapids, Mich.-based Autoconomy LLC. "Cash for Clunkers is going to hand the baton off to a fundamentally stronger economy as we move into the fourth quarter and into next year." Joseph Phillippi, president of AutoTrends Consulting Inc. in Short Hills, N.J., said, "Chrysler's problem was they didn't have much in the way of inventory. They shut down production and had been aggressively burning inventory, even before Cash for Clunkers." GM: August 'excellent' General Motors described August as an "excellent" month, saying the automaker maintained its share of the U.S. market and noted that it faced a tough comparison with August 2008, when sales were juiced to their highest level of the year by a special pricing promotion tied to the company's 100th anniversary. For Ford, it was the second straight month the automaker has reported higher sales. "Back-to-back sales increases has a nice ring to it," Ford sales analyst George Pipas said on a conference call. Honda, riding the strong sales of its Civic and Fit compacts, said it sold 161,439 vehicles in August. The Japanese automaker said the clunkers program pushed buyers to fuel-efficient vehicles, which helped the company. Toyota Motor Corp., which captured the largest percentage of clunkers sales, said it sold 225,088 vehicles in August, up from 6.4 percent over a year ago. Ford said its sales increase was driven by strong numbers for Ford's Focus, Fusion, Escape, Edge, Flex and Mercury Mariner. Ford also sold more Ranger and F-150 pickup trucks, which posted year-over-year sales increases of 57 percent and 13 percent, respectively. Pickup sales are considered a positive sign for the construction industry because many contractors are known to buy the vehicles. Earlier Tuesday, German automaker Volkswagen credited the Cash for Clunkers program with boosting its August sales by 11.4 percent compared with a year ago, giving the company its best sales month in the U.S. since December 2005. What will fall bring? The clunkers program, which kicked off July 24 and ended Aug. 24, was designed to kick-start auto sales by rewarding consumers for turning in older cars and trucks for more fuel-efficient new vehicles. Buyers received taxpayer-funded rebates of $3,500 or $4,500, depending on the gain in fuel economy. The question now facing automakers is how much of the sales momentum will carry over into the fall — and how much expired with the clunkers program.