[Vision2020] Clunkers Boost Industry

[Tom Hansen]

Courtesy of the August 4, 2009 edition of the Spokesman Review.

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Clunkers boost industry
July auto sales strongest in nearly a year
Ken Thomas And Tom Krisher / Associated Press

DETROIT – The government’s “cash for clunkers” program drew car and truck
buyers back to American showrooms last month, making July the best month
for auto sales in nearly a year and offering powerful evidence that the
rebates were working as senators debate whether to continue them.

In fact, some automakers, dealers and government officials declared an end
to the industry slump that nearly claimed the lives of General Motors and
Chrysler.

“We certainly expect that we’ve seen the worst of it,” said Dave
Zuchowski, Hyundai Motor Co.’s vice president of U.S. sales, whose sales
rose 12 percent over July of last year, the second-best in the industry,
behind only Suzuki.

“We’re not saying it’s going to be a high bounce back. We think it will be
good, solid, steady growth.”

Even though the overall U.S. market fell 12 percent when compared with
July of last year, gleeful automakers reported vastly better sales than in
the dismal first half of 2009.

“I think probably this is the greatest one-week energy conservation
program that may have come out of Washington or anywhere else,” said
George Pipas, Ford’s top sales analyst.

Without the clunkers program, July sales probably would have been about
the same as June, Pipas said.

Automakers and the Obama administration said the clunkers program did
everything it was designed to do – replace inefficient sport utility
vehicles with more efficient cars, boost auto sales and help lead the
economy out of recession.

Gas-guzzling vehicles from the 1990s were stacked up on nearly every new
car lot in America. As of Saturday, the government reported that 83
percent of the trade-ins under the clunker program were trucks, and 60
percent of the vehicles purchased were cars.

July was the best sales month since August 2008, when the industry sold
more than 1.2 million vehicles before the financial meltdown began.

Still, the sudden spike in sales depleted dealer stocks of nearly every
major automaker, leading many observers to predict that prices will almost
certainly climb later this year.

The Ford Focus, which gets 35 mpg on the highway, was the No. 1 purchase
of those trading in clunkers.

Some economists said the rise in auto sales shows that consumers will
spend money when they see bargains. Yet they warned that the clunker
program’s success hardly signals the beginning of a consumer spending
recovery.

“It tells you that shoppers remain focused on promotions, but it doesn’t
mean that shoppers are ready to spend in a more carefree manner,” said
Frank Badillo, senior economist at consulting group TNS Retail Forward.
Faced with mounting layoffs and tight credit, consumers remain very
tenuous about opening their wallets, he said.

Still, July auto sales rose to 11.2 million when converted to an annual
rate. That’s the first month this year that sales rose above the depressed
10 million level. As recently as 2007, car and light truck sales topped 16
million vehicles, but a drop in consumer confidence sent sales plunging
late last year.

Ford Motor Co., which has steadily been gaining sales since GM and
Chrysler took government aid and went through bankruptcy proceedings,
reported a year-over-year sales increase, up 2.4 percent for the first
year-over-year sales jump since November of 2007.

Troubled Chrysler posted a smaller year-over-year sales drop compared with
recent months, announcing sales fell 9.4 percent.

GM reported a 19 percent decline, far less than in past months. Toyota
Motor Co., where sales have taken a beating in the downturn, also fared
better than earlier in the year with an 11 percent drop.

Honda Motor Co. reported a 17 percent sales drop last month, largely
because it had a strong July in 2008. Nissan Motor Co. sales were down 25
percent.

Bob Carter, Toyota group vice president in the U.S., said the automaker
sold more than 30,000 vehicles through the clunker program, around 17
percent of its sales.

“For us, this really confirms that there’s an appetite out there for
fuel-efficient vehicles.”

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A car protrudes from a waste bin in front of a row of auto dealers in
Philadelphia on Monday.

http://tinyurl.com/mclh7u

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Seeya round town, Moscow.

Tom Hansen
Moscow, Idaho

"The Pessimist complains about the wind, the Optimist expects it to change
and the Realist adjusts his sails."

- Unknown