The $1 billion "cash for clunkers" program gave automakers, led by Ford Motor Co., a huge sales boost in July. Now the question is whether funding for the incentive will continue.
Thanks to a wave of trade-ins, Ford in July posted its first monthly sales increase in more than a year and a half.
The program, which offers rebates of as much as $4,500 to consumers who trade in older autos for new vehicles that meet certain fuel economy standards, has been hugely popular.
Other automakers also appeared to benefit from the trade-in stimulus, if not to the same degree. Honda said its sales declined 17 percent in July, a marked improvement over previous months. Toyota's sales declined 11 percent in July, compared with a 34 percent decline for the first seven months of the year, while General Motors had a 19 percent decline, far better than its 38 percent decline year-to-date. Chrysler posted similar improvements, with sales down just 9 percent on the month.
Early analysis of the program found consumers opting for vehicles that deliver higher mileage, with a 15.8 mpg average fuel economy rating for trade-ins, compared with an average of 25.4 mpg for the new cars being purchased.
For July, Ford sold 158,838 cars and light trucks, a 2 percent increase in new vehicle sales that broke a streak of 19 monthly declines. GM, emerging from bankruptcy last month, sold 189,443 vehicles, while Chrysler sold 89,900.
Michael DiGiovanni, GM's lead sales analyst, said the program added about 115,000 sales to the market, and on an annual basis could bump up U.S. sales by more than 1 million units. "Clearly, this has been a big boost to the economy," he said.