‘Cash for Clunkers’ under budget with 690,000 sales

WASHINGTON -- The popular "Cash for Clunkers" program generated nearly 700,000 new-car sales during the past month, giving the U.S. auto industry a badly needed jolt of activity during the deepest decline in auto sales in two decades.

The government, releasing final data on the car incentives, said Wednesday that dealers submitted 690,114 sales totaling $2.88 billion, bringing the program to a close under its $3 billion budget. Japanese auto manufacturers led American companies in new-car sales through the program, which ended late Monday.

Bryan Large, general manager of sales at Ford Country in Henderson, said he had about 60 clunkers brought in that qualified for the program. The cars had to meet myriad requirements such as having fuel mileage of less than 18 miles a gallon and not being more than 25 years old.

"We could have tripled those numbers if we had the inventory," he said. "A lot of people ended up buying a new car even if their car didn't qualify. It was a big boost in our business."

Many dealers are still waiting to be repaid for the "Cash for Clunkers" incentives they gave car buyers and were allowed to submit paperwork seeking reimbursement until late Tuesday.

Despite the summertime frenzy at dealerships, analysts said the growth in auto sales may be short-lived. Sales in July rose to 11.2 million when converted to an annual rate, the first month in 2009 in which sales had risen above the 10 million level. A drop in consumer confidence late last year sent sales plunging to depths unseen since the early 1980s, prompting lawmakers to create the program.

Jeremy Anwyl, chief executive officer of the auto Web site Edmunds.com, said dealers and automakers gained from the big boost in sales. Although the incentives helped consumers, average prices for vehicles rose as buyers less concerned about prices rushed to take advantage of the rebates.

Inventory shortages from the popular program could keep prices high and drive down new-vehicle sales.

"We have created a sales bubble," Anwyl said, "and now that bubble has burst."

The Obama administration declared the program a major success, saying "Cash for Clunkers" provided a needed stimulus to the auto industry and the broader economy.

"Manufacturing plants have added shifts and recalled workers," Transportation Secretary Ray LaHood said. "Moribund showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment."

The White House Council of Economic Advisers said the program will boost economic growth in the third quarter by 0.3 to 0.4 percentage points because of the increased auto sales in July and August. An estimated 42,000 jobs will be created or saved during the second half of the year, the White House said.

The biggest industry beneficiaries were Japanese automakers Toyota, Honda and Nissan, which accounted for 41 percent of the new-vehicle sales. That outpaced Detroit automakers General Motors, Ford and Chrysler, which had a share of nearly 39 percent. Toyota Motor Corp. led the industry with 19.4 percent of new sales, followed by General Motors Co. with 17.6 percent and Ford Motor Co. with 14.4 percent.

The Toyota Corolla was the most popular new vehicle purchased under the program. The Honda Civic, Toyota Camry and Ford Focus held the next three top spots. All four are built in the United States.

Large of Ford Country said the Fusion and Escape were also popular models.

The program, which began in late July, offered consumers rebates of $3,500 or $4,500 off the price of a new vehicle in return for trading in their older, less fuel-efficient vehicles to be scrapped. It proved far more popular than lawmakers originally thought. Congress added another $2 billion to the original $1 billion budget when the first pot of money nearly ran out in a week. The extra money was supposed to last through Labor Day, but the funding only lasted about a month.

Las Vegas Review-Journal writer Hubble Smith contributed to this report.