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Originally published September 2, 2009 at 12:14 AM | Page modified September 2, 2009 at 8:30 AM

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Ford rides clunkers' appeal to strong sales

Ford, boosted by the wildly popular "cash for clunkers" program, reported a 17 percent increase in August sales compared with a year ago...

Los Angeles Times

Ford, 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 and General Motors both 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 program. 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.

The sales declines exceeded those posted by both automakers in July, when GM said its year-over-year sales fell 19 percent and Chrysler reported a 9.4 percent decline in sales compared with July 2008.

GM executives, however, 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," George Pipas, Ford sales analyst, said on a conference call. Pipas also said he expects the industry overall to report higher sales for August — the first year-over-year monthly sales increase since October 2007.

Gains at Honda, Toyota

Many major automakers are expected to report improved sales for August, a month that provided the first blue skies for an industry in a slump for almost two years. Honda, riding the strong sales of its Civic and Fit compacts, said it sold 161,439 vehicles in August, up 14.2 percent compared with a year ago. The Japanese automaker said the clunkers program pushed buyers to fuel-efficient vehicles, which helped Honda.

"Honda's August sales speak to the attributes customers were looking for under [the program] and will continue to look for as the economic recovery takes shape," said John Mendel, executive vice president of American Honda. "The challenge will be maintaining this momentum going forward."

Toyota, which captured the largest percentage of clunkers sales, said it sold 225,088 vehicles in August, up from 10.5 percent over a year ago.

Ford said sales of its Ford, Lincoln and Mercury brands were up an even more robust 21 percent when sales to rental-car companies and corporate fleets are excluded. In all, Ford sold 176,323 vehicles last month.

The sales increase was driven by strong sales for Ford's Focus, Fusion, Escape, Edge, Flex and Mercury Mariner.

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Ford also sold more Ranger and F-150 pickups, 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 of them are purchased by contractors.

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.

More momentum?

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.

Consumers responded to the program with such enthusiasm that the government nearly burned through the initial $1 billion in the first week. An extra $2 billion kept the program going. In all, dealers submitted 690,000 clunker deals to the government, seeking rebates of $2.88 billion.

The question now facing automakers is how much of that sales momentum will carry on into the fall — and how much expired with the clunkers program.

"Now that cash-for-clunkers is over, we believe that the debate will center on the impact of a potential 'pull forward' effect on auto sales in the next few months," Barclay's auto analyst Brian Johnson wrote in a report on Friday.

Although GM initially grabbed the biggest share of clunker-motivated sales, by the end Toyota, with its popular Corolla and Prius, finished first with a 19.4 percent share. GM was second with 17.6 percent.

GM, Ford and Chrysler pulled in a smaller share of cash-for-clunkers sales than their overall share of the U.S. auto market during the first seven months of the year.

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