Cash For Clunkers Boosts Ford Production: "Eye-Popping" Sales in August

Posted by: David Kiley on August 13, 2009

Ford Motor Co. is upping its production of fuel efficient vehicles in the third quarter to meet demand, the company, says for vehicles being purchased under the extended Cash for Clunkers program, as well as overall increased interest in new cars by consumers.

Cash for Clunkers is pushing August sales so far this month to levels not seen since before the global credit meltdown last Fall. In the first few days of August, Edmunds.com says the auto industry was cracking at a 16 million a year rate. That’s up from less than a 10 million selling rate in the first half of the year, and less than 12 million rate in July.

Ford senior sales analyst George Pipas says that it is too early to project the selling rate for August on the whole. “But I can tell you that retail sales we are seeing is eyepopping versus a year ago.”

Pipas said that he fully expected that sales will fallback when the government program expires. “But it’s hard to say to what level, because it is so dependent on the economy,” Pipas said.

Ford will build 10,000 more Focus sub-compact cars and Escape crossover SUVs than it had planned. In July, the first month of the government’s Clunkers program, the Focus was the top model purchased with the help of government rebates, while the Escape was the only utility vehicle to make the top ten.

The Cash for Clunkers program gives care and truck buyers either $3,500 or $4,500 toward the purchase of a new, generally more fuel efficient, vehicle. The engine in the trade-ins are destroyed and recycled, along with the rest of the vehicle, to prevent traded in vehicles from hitting the used car market.

Congress extended the program with $2 billion, on top of the original $1 billion, before breaking for recess.

Ford has not only benefitted from the government program, but also, the company says, in increased interest in its vehicles from higher quality ratings on its vehicles. Analysts also point to the fact that Ford has been picking off customers of General Motors and Chrysler who deserted those automakers in recent months as they went through Chapter 11 Bankruptcy.

Ford is the only U.S. automaker not to take a government bailout or file Chapter 11 this year.

The increased production will come after the Clunkers program has run out of money, but Ford says it will need it to replenish depleted inventories and deal with increasing demand for more fuel efficient vehicles as consumers anticipate higher gas prices with a recovering economy.

Ford economists have also said that demand for new vehicles, independent of the Clunker program, will be stronger in the second half of the year than the first half as consumers see investment portfolios bounce back with the stock market and job loss data from the government improve.

Ford is increasing its North American production to a total of 495,000 units in the third quarter, an increase of 18% from the same quarter in 2008. Ford also plans to produce 570,000 vehicles in the fourth quarter, a 33% boost from the same quarter last year.

One of the problems facing Ford and other automakers is that dealerships are running short of the models that are most commonly sought under the program. A request has been made by some legislators to allow consumers to get vouchers for vehicles dealers do not have in stock, so they can get the car they want before the Clunker fund runs out of money.

Japanese automakers have objected to that request, claiming it would create confusion among dealers and consumers. However, some Japanese automakers have models that qualify, but haven’t been as popular in the program, and are hoping that as models in demand run short, they can use the program to drive consumers to other less popular models.

“It’s another whole level of complexity in a very complex program already,” said Mike Stanton, president and chief executive of the Association of International Automobile Manufacturers.

Transportation Secretary Ray LaHood earlier this week asking that consumers be allowed to receive vouchers from the manufacturers for vehicles that have yet to arrive at dealerships. The current rules, though, require the vehicles to be at dealerships to qualify.

Reader Comments

Jeff B

August 13, 2009 12:20 PM

It's pretty amazing to me that so many people are buying the Ford Focus. I drove one for about a week in & around Seattle this month, and I have to say I was not impressed at all. Seats are very uncomfortable (no lower back support) and the car handles poorly, & bottoms out easily over large bumps. No doubt Ford has crammed it full of features for the price you pay, but anyone who test drives a Civic or Mazda3 would have to be brain dead to buy the Focus instead. The car also has a poor resale value, so after driving it for a few years you'll just have another "clunker" on your hands.

Karl

August 13, 2009 12:36 PM

Perhaps the ones in charge of 'Cash for Clunkers' might want to 'Google' this- YOUTUBE CASH FOR CLUNKERS SCAM KICKBACKS BOGUS TRADES, and watch it on the web! IF there are dealerships having their own employees buying old cars & trading them in, & then purchasing a new car, & then selling that new car back to the dealer so the dealer can DEFRAUD the government out of $3,500 or $4,500 per transaction, then it should be investigated, wouldn't you agree? REMEMBER, most Car Dealers know all the 'TRICKS' of the 'trade', don't they?

Karl

August 13, 2009 1:46 PM

If you really think about it, a Car Dealership COULD have several, or even hundreds of so-called 'customers' come into the dealership with a 'clunker' that was bought recently for a hundred dollars or so, & the date of purchase on this 'clunker' could be altered to show it was owned by the so-called 'customer' for several years, & then it could be 'traded-in' on a new car. Then AFTER the dealer gets funded by the bank, & the government for the 'new car transaction', the so-called 'customer' could sell the vehicle right back to the dealer, & the dealer has the $4,500 from the 'Cash for Clunkers' program, & the dealer also gets the car back with no miles on it, & can now re-sell it as a 'demo', right? The loan from the bank is paid-off immediately- in full. Salespeople could be part of the SCAM, & even get a commission on the SCAM, right? WAKE-UP Washington! 'Google' this- YOUTUBE CASH FOR CLUNKERS SCAM KICKBACKS BOGUS TRADES, and watch it! Then 'Google' this- AUTO DEALER LOUIS F HARRELSON TO PLEAD GUILTY, and read it! Look what it says in that article!!!!!

Greg

August 13, 2009 5:17 PM

Interesting theories fellas, but as a long-time human, I can tell you that widespread, coordinated plots such as you describe are entirely beyond the reach of mankind. We can't organize, we can't orchestrate timing, and we can't keep secrets.

Good rule of thumb for you guys: if a conspiracy theory takes more than one person to execute, it's a joke. Visit Roswell, boys.

mike

August 13, 2009 5:28 PM

Well... a fraud like that would be hard to pull off. A clunker need to have being registered and insured for at least a year to qualify for trade in.

Pat

August 13, 2009 7:52 PM

As someone who manages the clunker process at a dealership, Karl, you are all wet ... pages of documentation supporting continued ownership, registration and insurance over a period of more than one year are required ....

BTW Karl, being paranoid doesnt mean someone isnt out to get you ...

Robyn Roberts

August 13, 2009 8:22 PM

I've put together a good resource site of the Requirements, the Pros and Cons, the Cash for Clunkers calculator, the Kelley Blue Book Calculator, Other Incentives from Dealers, Top 10 Fuel-Efficient Vehicles, and Clunker Humor (Jon Stewart).

http://www.autostimulusplan.org

Scott

August 13, 2009 9:21 PM

To quailfy for the rebate, the seller must verify that the car has been both registered in their name and insured in their name for the past year.

james shrum

August 13, 2009 10:58 PM

Jeff B is part of the problem in the US by going out and buying foreign name plates instead of the American name plates The Mazda was owned by Ford for several years I sure that the mazda that he talks about was made by ford.you people that buy the foreign name plates are hurting your own Country.the autos made over here by a foreign name is not American. the most of the money goes back to their home country to their Headquartersdon't call them American

jimhenry

August 14, 2009 1:59 AM

You can either Lease or buy a new car to use the cash for clunkers program. It has to be new vehicles and not used ones.


Jimhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

Tim

August 14, 2009 7:20 AM

Karl, get a handle on yourself dork! They have to show a title that has been in your name for at least the last year, they have to provide proof of insurance that the car was actually insured for the last year and a registration that it was registered for the last year! all in the same persons name...now I work at a dealership and I can tell you that as hard as it was to do these piece of shit cfc deals, the work would have been more than anybody at any dealership I know would have wanted to invest in, ohhh and by the way I am sure they have brought the DMv and the Insurance companies in on the scam along with the Salesperson and the dealership! Just shut the fuck up and stop looking for shit to whine about and get a life!

Tim

August 14, 2009 7:32 AM

I guess the rest of the the U.S. is wrong and Jeff B is right, because he drove a who knows what model year Ford Focus from some ...only can assume...Rental place, because they are known for taking care of their vehicles (right Jeff) and then wants to give an automotive review on a car that was probably beat to shit and ready to go to auction so that a savvy car buyer like "Jeff" who is squeezing every penny out of the dealer who is trying to sell him not only a good car and service, has to let the "savvy car buyer" leave the Dealership and go to some podunk auction so Jeff can Boast about how he got the best deal in the world on his car and the thing dies 2yr's later because it was a p.o.s. that he got for $1500 less and now it's Fords fault that his car wasn't any good and that he will never buy another Ford again! Thanks for the insight Jeff!

Karl

August 14, 2009 1:49 PM

Let's follow this EXAMPLE through: A potential 'buyer' of a new car, let's say a $10,500.00 Nissan Versa, goes into a Nissan dealership with a 'clunker'. The 'clunker' qualifies for a $4,500.00 allowance from the government's program. The sale goes through at full sticker. (Nissan Versas can be as low as $9,995.00, according to recent TV commercials.) So, let's say it's a $10,500.00 Versa (with a few more options) - $4,500.00 'clunker rebate' = $6,000.00, correct? If the customer finances his taxes into the equation, at 7% tax, then the total amount financed is $6,420.00, correct? (You're taxed on the amount financed). The 'customer' leaves in his new car. Two weeks later, the customer pays the total balance to the bank off in FULL, & avoids any interest. He goes back to the dealership & sells the Versa back to them. *(The dealer gave the 'customer' the money to pay-off the loan once the dealer was funded from the bank because it's a SCAM). The 'customer' gets a cut of the $4,500.00 from the 'clunker program' & the dealer keeps his cut. The car is now back on the lot with little, or no miles on it. It can be re-sold, or leased as a demo, or as a new car because it has very little mileage on it. IS THIS SCENARIO POSSIBLE? Answer: YES! And believe it or not, the dealer COULD supply the 'customer' with the 'CLUNKER' from his Used Car inventory from the beginning, right? WAKE-UP, Washington!

LOL

August 14, 2009 2:30 PM

Karl, who cares...

Karl

August 14, 2009 3:24 PM

Tim, 'Google' this- AUTO DEALER LOUIS F HARRELSON TO PLEAD GUILTY, and read it! Back-dating documents, and falsifying documents is EASY for these dealers! WAKE-UP!!! And to LOL: The money in the 'Cash for Clunkers' program is TAXPAYER'S money, isn't it? It's people like YOU, who don't care, that are part of the reason that this country is COLLAPSING, in my opinion. Thank you.

DJ

August 21, 2009 5:01 PM

Karl,

You are a moron. The dealer COULD NOT supply the "customeR" with the "clunker" unless the dealer predicted this program a year ago. THE CUSTOMER MUST PROVE THE CLUNKER WAS REGISTERED AND INSURED IN THE CUSTOMER'S NAME FOR 1 YEAR. Get over your conspiracy theories and READ THE NEWS about how difficult it is to prove these things and the HIGH percentage of denials by the gov't if the proof isn't perfect.

Chris D

August 27, 2009 3:54 PM

It's no surprise the Ford Focus is hot. I drove one earlier this year and it is top notch on all accounts. So good in fact I bought one and traded in my clunker Toyota.Best move I ever made. Thanks Ford!

Karl

September 3, 2009 4:01 PM

DJ, Have you ever worked at a car dealership? Have you ever seen what takes place by managers & others at car dealerships? Do you believe it's possible to ALTER the date of a title, or a registration? Do you believe that all managers & salespeople at car dealerships are honest & ethical? Did you 'Google' this- AUTO DEALER LOUIS F HARRELSON TO PLEAD GUILTY, and read it? What PLANET are you from? Thank you.

Post a comment

 

About

Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

BW Mall - Sponsored Links

Buy a link now!