US Brands Benefit From Cash For Clunkers Program

The on again, off again, on again and now stalled “Car Allowance Rebate System” or CARS has been deemed as a success, but that also depends on how you define the word success. As the “cash for clunkers” or “car scrappage” program for the United States, CARS was behind the late July surge in sales which helped propel Ford and several other car companies to new heights for the month.

Big Three Sales Leaders

Indeed, according to The Detroit News, America’s three traditional car manufacturers – General Motors, Ford and Chrysler – took 47% of the sales which is quite good as they now control less than forty percent of the domestic market. One of the biggest beneficiaries for Ford was its compact Focus, an aged but fuel efficient model which gets 35 mpg on the highway. The Chrysler PT Cruiser propelled Chrysler sales while GM credits its all new Chevrolet Traverse crossover with sparking its sales. For the month, Ford was up 2% while Chrysler and General Motors were down 9 and 19 percent respectively.

For the year, all three manufacturers are down significantly over 2008, with Ford showing sales down by 28.5% for the year, GM off 37.7% and Chrysler down 42%. However, there could be a significant narrowing of that gap regardless of whether the Senate chooses to extend the CARS program which is nearly out of cash. Beginning last August, sales began to slide even further as the economic collapse began to kick in. By year’s end, sales were down to levels not seen in a generation which means that all three car companies could soon top those ultra low number no matter whether CARS is in place or not.

New Plant Closures, Terminations

GM and Chrysler have recently emerged from bankruptcy and are in the process of closing additional plants, terminating workers and aligning production capacity to meet anticipated demand. Ford has avoided bankruptcy and has the newest products on the market, which means that by year end the Blue Oval could very well dethrone GM as the top automaker in domestic sales unless Toyota beats them to it.

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