DETROIT — 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.
Hyundai and Subaru joined Ford in the plus column. Chrysler, which had been the worstperforming of the major automakers, managed a single-digit decline in July. If converted to an annual rate, overall industry sales could top 10 million cars and trucks for the first time in 2009. 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.
General Motors Co., which joined Chrysler in bankruptcy court for a time, said its July sales fell 19 percent from last year. But that figure was weighed bya 47-percent drop in sales to fleet customers such as rental car companies. Retail sales fell a smaller 9 percent.
Officially called the Car Allowance Rebate System, the program offers owners of older 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 hangson whether the Senate will vote this week to extend funding.
Subaru of America Inc. said its U.S. sales leaped 34 percent in July on sizable sales improvements for most of its models. Hyundai said its sales jumped 12 percent, while Toyota Motor Co., whose sales have taken a beating in the downturn, posted a slower sales decline of 11 percent.
Tom Libby, an independent Detroit-area auto analyst, said the government rebate program provided a big shot in the arm to automakers at a time when it appeared overall sales may be stabilizing after months of sharp declines.
"It has psychologically had a huge positive effect for the industry, which is what it needed," Libby said.
But it remains unclear whether customers will keep buying cars when the program is over, he said.Often, demand falls off after large incentive programs end.
George Pipas, Ford's top sales analyst, attributed the company's higher sales to its more fuel-efficient products, saying that consumers are drawn toward better gas mileage.
Shares of Ford rose 33 cents Monday to close at $8.33. Shares of the company have risen steadily since Ford reported a surprise second-quarter profit last month.
Pipas said early indications show that July U.S. sales, when adjusted for seasonality and projected at an annual rate, could hit around 11.5 million vehicles.
Without the clunkers program, July sales probably would have been about the same as June, about 9.7 million, he said.
Industry sales have been running around 9.5 million for the first six months of the year.
GM and Chrysler, which are surviving on a total of $65 billion in government aid, each has said their expenses are so low that they can break even if U.S. sales run around 10.5 million units per year.
"There's no question that the clunkers are going to help us get above the 10 million unit mark this month," said Erich Merkle, president of the industry consulting firm auto economy.com in Grand Rapids, Mich.
German automaker Daimler AG said its sales in the U.S. fell by 24 percent in July, amid plunging sales of its Smart minicar and Mercedes-Benz luxury vehicles. Honda Motor Co., Japan's No. 2 automaker, said its U.S. sales fell 17 percent last month. Nissan Motor Co. said its sales dropped 25 percent.
Information for this article was contributed by Ken Thomas, Dan Strumpf and Bree Fowler of The Associated Press.
Business, Pages 19, 24 on 08/04/2009