Ford expects to report a jump in July sales, its first since November 2007, in part due to demand for vehicles like the 2010 Ford Fusion Hybrid, shown during its unveiling, at the L.A. Auto Show
With several automakers, including Ford and Subaru signaling they will report strong sales gains for July, industry analysts are largely declaring the Cash-for-Clunkers program a success, at least for the short-term. But dealers around the country are approaching the panic level as they wait to see if the U.S. Senate will approve a $2 billion cash infusion to keep the program going.
Originally expected to post a modest 4% year-over-year sales decline, Ford’s chief analyst George Pipas hinted that July sales will, in fact, bring the automaker its first monthly increase since November 2007. Subaru also signaled it would see a July sales increase, though like Ford, it won’t release formal figures until later in the day.
The website, Edmunds.com, is projecting an overall 16% decline for the month, compared with July 2008 – compared with a year-to-date plunge of 35% — but Edmunds also predicted a decline for Ford, so its forecast could prove conservative. And, even so, the dealer referral site is projecting that the industry’s July 2009 figures will be up 11% compared to June of this year.
Whatever the actual figures for July, most analysts are crediting the so-called Cash-for-Clunkers program for the industry’s newfound momentum. The measure, formally known as the Cash Allowance Rebate System, provides up to $4500 in vouchers to those trading in an old, low-mileage vehicle for a new, more fuel-efficient model.
Congress set aside $1 billion to fund the program, but by last Friday, barely a week after it had officially gone into effect, there were indications the pot had already run dry, leaving dealers across the country trying to figure out how to proceed as potential customers flooded their showrooms.
On Friday, with the backing of the White House, the U.S. House of Representatives approved another $2 billion for Clunkers – still leaving the combined total $1 billion short of the $4 billion sponsors originally asked for. But the new funds would triple, to around 750,000, the number of vehicles CARS could handle.
It’s unclear if and when the Senate would act on the funding request, but it could happen this week. While House has already packed up for the annual August recess, the Senate remains in session to handle the planned vote on Supreme Court nominee Sonia Sotomayor. But there is less support on that side of Capitol Hill, so the outcome remains uncertain.
Hoping to ensure they don’t lose potential sales, many U.S. dealers are proceeding as if the extension of the CARS bill will happen. But some have also begun requiring customers to sign waivers that would force them to return the $4,500 should the Senate vote down the additional $2 billion request.