Cash For Clunkers Helps Ford To July Gain

Posted by: David Kiley on August 02, 2009

Ford Motor Co. on Monday will post a single-digit sales gain over the same month a year ago, the first monthly sales gain the automaker has posted since 2007.

Company officials said Sunday they attributed the sales gain to the Federal Cash for Clunkers program, as well as a feeling among a growing number of consumers that the worst of the Recession is behind them.

All automakers will post July sales on Monday.

The Cash for Clunkers program, signed into law in late June, allowed dealers in July to give consumers with old vehicles not worth much in a trade an additional $3,500 or $4,500 above their own incentives courtesy of the U.S. taxpayer. The program, modeled after similar programs in Europe, is part of the economic stimulus.

Under the program, a buyer who trades a vehicle that gets 18 mpg or less for a car with a mileage improvement of more than four miles per gallon but less than 10 were eligible for $3,500; a buyer whose new vehicle was rated 10 miles per gallon or better than the old one was eligible for $4,500; an old pickup truck could be swapped for a new one with just a 2 mpg improvement for $3,500. If the pickup or SUV being bought is 5MPG more, the benefit is $4,500. Heavu Duty trucks and some commercial vehicles have different rules. The trade in vehicles have been old with high-mileage because there is no other trade-in value on the car, unless automakers and dealers add to the government rebates (which most have).

The Clunkers program is estimated to have been a part of more than 200,000 sales in July. It proved so popular that the House of Representatives scrambles Friday to pass a bill authorizing an additional $2 billion. The first $1 billion was exhausted on Friday after just a week of the government processing applications. The U.S. Senate will take up the vote thos week. President Obama has said he will sign the bill.

Though the bill was written to give preference to people trading in old pickup trucks and full-sized SUVs for new ones, the results favored cars. The top vehicle traded in under the Clunkers program was the Ford Explorer SUV, most of them from the 1990s when Ford was selling around 400,000 a year. The top vehicle purchased under the program was the Ford Focus. There were no pickups in the top ten vehicles purchased under Clunkers. And there was only one SUV, the Ford Escape crossover, which is offered in a hybrid version.

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Reader Comments

vufan

August 3, 2009 06:01 AM

Yes, I think it's a good way to stimulate the US economy in this time, support the ailing auto industry,but also a green way by eliminating the old car that can pollute the atmosphere.

Karl

August 3, 2009 10:02 AM

'Cash for Clunkers' is basically a program that uses TAXPAYER'S money to get other taxpayers to buy cars, correct? Why doesn't the government come up with ARCL's for consumers who want a car? ARCL's are 'Adjustable Rate Car Loans', much the same as ARM's (Adjustable Rate Mortgages). It worked in the housing industry, right? So why not in the auto industry? Try it- Americans might like it! Just think, everyone can get a Cadillac Escalade for $99 a month until the rate adjusts, huh? I say GO FOR IT!

Chris

August 3, 2009 07:17 PM

CARS is a rip-off being put over the responsible middle class tax payers of this country. Too few people are benefiting from the program and those who do not qualify are getting stuck with paying the over $1,000,000,000 added to the national debt.

I have yet to get a break under this administration and all I see are bills piling up. Where is my middle class bailout?

jerrye

August 6, 2009 01:35 AM

Clunkers is a govt incentive, much as homeowner's tax break, oil drilling allowances, charitablew giving allowances. Pesonally I much prefer govt incentives to influence my behavior as opposed to govt mandates!

AnnanAmos

August 7, 2009 12:31 PM

It's good to see an American automaker being able to post something resembling a profit again. It appeared from the get go, that if one of the domestics was primed to be able to make it, it was going to be Ford. The Focus is easily one of the star vehicles for Ford, but only 5 vehicles of Ford's commercial lineup get over 20 mpg. (Technically 6 - there's a Fusion hybrid model.) Contrasted with foreign manufacturers, Honda's flagship, the Civic, on the basic model, costs about the same as a Focus and gets 36 mpg city, compared with 24 mpg city for the Focus - but then again, the Japanese auto firms have always out gunned us on that aspect - they can make cars that get better mileage...supposedly, although these days things are evening up. The Ford lineup is comparable to Toyota - even the pickups (F 150 and Ranger) get about the same mileage as the Tundra and the Tacoma.
The next bit about the Cash for Clunkers program is that we're supposed to be upgrading to vehicles that get far better mileage, and 18/21 isn't going to be cutting it before too long. Not to disparage the oil/gas industry, but those greedy pigs are going to want to return to the record profits they were making before the recession dropped the floor out of gas prices and demand, which has been creeping back up. We'll be back at $3 a gallon before next spring, probably before Christmas, and we'll probably be back at $4 by Sept. 2010. So if the Big 3 are REALLY serious, they should start cranking out some far better performing vehicles in that department.

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Want the straight scoop on the auto industry? Detroit bureau chief David Welch , Dexter Roberts and Ian Rowley bring daily scoop, keen observations and provocative perspective on the auto business from around the globe. Read their take on such weighty issues as Detroit’s attempt at a comeback, Toyota’s quest for dominance and the search for an efficient car.

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