Cash For Clunkers Program Was Failure

cash for clunkers
By Mira Oberman (AFP)

CHICAGO — US auto sales plunged 22.7 percent in September after the end of the popular “Cash for Clunkers” program left cautious consumers with few reasons to visit dealerships, industry data showed Thursday.

But the Detroit Three managed to claw back some of the share they had lost. Asian automakers had captured more than half the US market for the first time last month thanks to that loss.

The Asian share slipped to 46.5 percent from 52.3 percent in August but was still 7.6 points higher than September 2008, according to Autodata.
General Motors, Ford and Chrysler held 43.8 percent of the market in September, up three points from August, but down 8.5 points from a year ago.

European automakers increased their share to 9.6 percent from 6.9 percent in August and 7.8 percent in September 2008.

Automakers were mixed in their outlook for the rest of the year after total sales fell to a seasonally adjusted annualized rate of 9.22 million vehicles from 14.09 in August and 12.57 in September 2008.

“We believe the remainder of 2009 will continue to be a challenge for the US automotive market,” said Peter Fong, lead executive for Chrysler’s sales organization.

“Credit markets have thawed slightly, but still remain tight, and consumer confidence, as we saw in September, is tenuous.”
Chrysler posted a 42 percent drop in sales to 62,197 vehicles as its share fell to 8.3 percent from 11.1 percent a year earlier.

Ford sales analyst George Pipas said the automaker expects industry sales to improve in the fourth quarter from the weak performance earlier this year but cautioned that “it’s going to be pretty slow going.”

“For many consumers, it won’t feel like the recession is over, even though technically it may be,” Pipas said.

Ford’s sales fell 5.8 percent to 109,525 vehicles, but it managed to post its first quarterly sales increase in four years thanks to a 17 percent spike in August and a two percent gain in July.

The only major US automaker to escape bankruptcy, Ford also increased its market share by 14.7 percent from 12.1 percent in September 2009, which it said marks the 11th time in the past 12 months it gained retail market share.

Toyota, which saw sales fall an unadjusted 12.6 percent to 126,015 vehicles but still managed to increase its share by 1.9 points to 16.9 percent, was more optimistic.
“Improving economic conditions and the (Clunkers) program led to a significant increase for the industry in the third quarter over the first half-year,” said Don Esmond, vice president of automotive operations for Toyota Motor Sales USA.
“Moving into the fourth quarter, we expect continued momentum will close the year on a bright note.”

The three-billion-dollar Cash for Clunkers initiative sparked nearly 700,000 auto sales before it expired in August by offering owners of old gasoline guzzlers up to 4,500 dollars toward a new, more fuel-efficient vehicle.

“We believe consumer traffic at dealerships evaporated in the absence of the incentive program,” wrote Standard & Poor’s equity research analyst Efraim Levy.
“However, we expect the September lull to be temporary, as the comparisons get easier and we see the economy improving.”

GM said weak consumer confidence and extremely low inventory also hit sales, which dropped 45 percent to 156,673 vehicles.

The company’s share fell to 20.8 percent from 29.1 percent in September 2008, but was nonetheless up 1.4 points from August’s dismal performance, according to Autodata.

Korea’s Hyundai and Kia continued to post dramatic gains.
Hyundai’s sales jumped 27.2 percent at 31,511 as its share rose to 4.2 percent from 2.6 percent a year ago. Kia’s sales rose 24.4 percent to 21,623 as its share increased to 2.9 percent from 1.8 percent in September 2008.

Original full article is hosted at AFP

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