Cash for Clunkers Boosted July Auto Sales

(MoneyWatch)  In just a few days, the unexpected success of the U.S. government's "Cash for Clunkers" program helped boost the July sales rate to the highest level so far this year, according to an analyst's report.

"July industry sales of light vehicles appear to have received a nice boost over the past few days from the government's CARS (Car Allowance Rebate System) scrappage incentive," said Brian Johnson, auto industry analyst for Barclays Capital.

He estimated the Seasonally Adjusted Annual Rate for July at around 10.3 million units. The SAAR for June was 9.7 million, he said. For the first half, the SAAR was 9.6 million, Johnson said.

Cash for Clunkers offers qualified consumers a government credit of $3,500 or $4,500 for an eligible trade-in, toward the purchase or lease of a more fuel-efficient new vehicle.

The $1 billion program, which kicked off a week ago, has been such a success that it appears to have run out of money, and Congress is scrambling to find more funding to keep it going through the original end date of Nov. 1.

Even with the improved sales rate, Johnson still expects July unit sales to be down 18 percent from the year-ago month, he said in a report today. Of the domestic automakers, he said Ford should continue to gain share, as Chrysler and General Motors underperform the rest of the market.

"Ford should once again largely outperform the overall market, and may actually post its first y-o-y (year-over-year) monthly sales gain in nearly two years," he said.

Automakers will report July sales on Monday, Aug. 3.

Photo: Chrysler.com