DETROIT (AP) — Lured by the government’s “cash for clunkers” campaign, car and truck buyers started returning to showrooms last month, as Ford Motor Co. reported its first U.S. sales increase in nearly two years and other major automakers said sales showed signs of stability.
Other automakers, such as Hyundai and Subaru, turned in stronger performances. July sales, if converted to an annual rate, could top 10 million cars and trucks, the first month this year that sales rose above that depressed level. As recently as 2007, car and light truck sales topped 16 million vehicles, but the recession, tight credit and a lack of consumer confidence sent sales plunging late last year.
Ford, led by the redesigned midsize Ford Fusion, and strong sales of the Escape crossover vehicle and F-series pickup line, offered encouraging signs for industry analysts who predicted a modest improvement in the second-half of the year.
July sales of Ford, Lincoln, and Mercury light vehicles rose 1.6 percent from the same month last year. It was the first year-over-year rise since November 2007. Ford sold 158,354 vehicles, a 2.2 percent increase over June’s figures, showing that the worst U.S. auto sales slump in a quarter-century may be easing.
Meanwhile, crosstown rival Chrysler Group LLC posted a smaller year-over-year sales drop compared with recent months. The Auburn Hills automaker, which emerged from bankruptcy protection earlier this year, said its sales fell 9.4 percent and received help from heavy incentives and the cash for clunkers program.
Officially called the Car Allowance Rebate System, or CARS, the program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle, in exchange for scrapping their old vehicle.
Congress approved the plan early in July, but the government considered suspending it on Thursday after an overwhelming response threatened to deplete the $1 billion allocated for the rebates.
But the program continued and the House voted to allocate another $2 billion to keep the sales going. The program’s fate hangs on whether the Senate will vote to extend more funds this week.
Cash for clunkers drove a surge of shoppers into dealerships over the last week, stunning automakers and dealers and overwhelming the program’s Web site. The Obama administration pressured the Senate on Monday to speed more funding to the program, which is rapidly blowing through its initial funds.
Officials said the program is succeeding in improving the efficiency of vehicles on the road. One official said the average fuel economy of new vehicles purchased through the program was 25.4 miles per gallon and the average fuel efficiency of the trade-ins was 15.8 mpg, representing a 9.6 mpg fuel economy increase.
The clunkers program boosted Ford’s sales despite concerns about whether it would be suspended during the final two sales days of the month. The program was expected to boost industry sales overall, which were down 35 percent in the first half of 2009.