Auto sales post best month of year but could slow

US auto sales, boosted by Clunkers, rise over 1M in Aug. but slowdown looms as rebates end

• By Kimberly S. Johnson and Dan Strumpf, AP Auto Writers
• On Tuesday September 1, 2009, 7:32 pm EDT

DETROIT (AP) -- The nation's automakers are bracing for quieter showrooms and slower sales this autumn after the Cash for Clunkers program offered a big but unsustainable boost in August.

U.S. sales of cars and light trucks rose to 1.3 million in August, a roughly 30 percent increase from July. It also was the first monthly year-over-year gain since October 2007.

Ford, Toyota, Hyundai and Honda were the big winners as consumers snapped up their fuel-efficient cars. Rivals Chrysler Group LLC and General Motors Co. endured another month of falling sales, although their high-mileage vehicles did better.

But the August industry gains could quickly be followed by a slowdown in September and for the rest of the fall, automakers and analysts warned Tuesday. Although the clunkers program succeeded in bringing in new buyers, a large portion were people who planned to buy vehicles later in the year.

Now the question is whether automakers will need to roll out an expensive new round of rebates and low-cost financing to spur sales.

Cash for Clunkers, which ended on Aug. 24, drew hordes of buyers into quiet dealerships by offering up to $4,500 toward new, more fuel-efficient cars and trucks. The hefty rebates gave automakers and dealers a much-needed lift, spurring 690,114 new sales, many of them during August, at a taxpayer cost of $2.88 billion.

Several automakers said their supplies plummeted during August, especially for their fuel-efficient models. That could make it harder for customers to find the exact model they want going forward.

Still, the coming months might offer some stability in an auto sales market that's been floundering for more than a year. Even before the program began in late July, sales were showing small signs of improvement.

"We believe the fourth quarter will be better than the second quarter," as the broader economy shows signs of recovery, said Ken Czubay, Ford's vice president of U.S. marketing and sales.

August sales at Ford Motor Co. totaled 181,826 cars and light trucks, up 17 percent from a year earlier, when high gas prices and growing economic uncertainty kept car buyers at home.

Two of Ford's vehicles -- the Focus and Escape -- ranked among the top selling cars under the clunkers program. Sales of the Focus rose 56 percent while those of the Escape small sport utility vehicle climbed 49 percent.

In another sign of a strengthening economy, sales rose for Ford's pickup trucks, which are popular among contractors and other small businesses. Ford's F-Series rose nearly 13 percent. Those results, along with a 57.4 increase in Ranger sales -- a small version of the F-150 -- may reflect that the "toughest part of the recession, the most dramatic declines" are over, the company said.

Japanese automakers Toyota Motor Corp. and Honda Motor Co. also posted gains year-over-year in August. Toyota sales rose 6.4 percent to 225,088, lifted by small cars like the Corolla, the best-selling clunkers vehicle.

Honda sales rose 9.9 percent to 161,439, while sales at Nissan Motor Co. slipped 2.9 percent.

At General Motors Co., sales fell 20 percent to 245,550. GM said its inventory levels hit an all-time low of 379,000 during August, but like Ford will be replenished this month thanks to production increases.

GM vehicles like the Chevrolet Aveo subcompact, the Cobalt sedan and Equinox crossover got a lift from the clunkers program. No GM vehicles made the closely watched list of top-10 Cash for Clunkers sales, but GM's share of clunker purchases were second only to Japan's Toyota Motor Corp.

Meanwhile, low supplies of fuel-efficient vehicles at Chrysler kept the automaker from benefiting more from the clunkers program, whose rebates encouraged customers to buy gas sippers in exchange for guzzlers with gas mileage of 18 mpg or less.

To make up for the shortfalls, Chrysler is boosting production by 50,000 vehicles of most of its vehicles through the end of the year.

Chrysler sales fell 15 percent to 93,222 units. That was less than the combined sales of Hyundai Motor America and affiliate Kia Motors America, whose smaller sedans helped boost sales to a combined 100,665 for August.

Dan Strumpf reported from New York. AP Auto Writer Bree Fowler contributed from New York and Associated Press Writer Stephen Manning contributed from Washington.

Buzz up!