August 26, 2009 in Business, Nation/World

Cash for Clunkers generates 700K new car sales

Associated Press
 

WASHINGTON — Cash for Clunkers generated nearly 700,000 new car sales and ended under its $3 billion budget, the Transportation Department said Wednesday.

Releasing final data, the government said dealers submitted 690,114 vouchers totaling $2.88 billion. New car sales through the program ended late Monday and dealers were allowed to submit paperwork to the government until late Tuesday.

Japanese automakers Toyota, Honda and Nissan accounted for 41 percent of the new vehicle sales, outpacing Detroit automakers General Motors, Ford and Chrysler, which had a share of nearly 39 percent. Toyota Motor Corp. led the industry with 19.4 percent of new sales, followed by General Motors Co. with 17.6 percent and Ford Motor Co. with 14.4 percent.

The Toyota Corolla was the most popular new vehicle purchased under the program, followed by the Honda Civic, Toyota Camry and Ford Focus.

Transportation Secretary Ray LaHood said U.S. consumers and workers were “the clear winners” under the program. “Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment,” he said.

The White House Council of Economic Advisers said the program will boost economic growth in the third quarter by 0.3 to 0.4 percentage points because of the increased auto sales in July and August. An estimated 42,000 jobs will be created or saved during the second half of the year, the White House said.

The program, which began in late July, offered consumers rebates of $3,500 or $4,500 off the price of a new vehicle in return for trading in their older, less fuel-efficient vehicles. The trade-in vehicles needed to get 18 miles per gallon or less and were then scrapped.

It proved far more popular than lawmakers originally thought. Congress was forced to add another $2 billion to the original $1 billion budget when the first pot of money nearly ran out in a week. The extra money was supposed to last through Labor Day, but in the end, Cash for Clunkers ran only about a month.

Dealers loved the new sales, but reported major hassles trying to get the government to repay them for the rebates they gave customers. The government extended the deadline for them to file deals, but many still haven’t received their money.

Peter Kitzmiller, president of the Maryland Automobile Dealers Association, said most dealers appeared to get their paperwork in by the Tuesday night deadline. He expressed hope the pace of repayments would pick up now that government officials are working through the backlog.

The Transportation Department said Wednesday that 2,000 people are processing dealer applications, but Kitzmiller said the rate of repayment hasn’t increased. “I’m a little concerned that we haven’t seen any improvement,” he said.

The government said 84 percent of the trade-ins were trucks and 59 percent of the new vehicles were passenger cars. New vehicles bought through Cash for Clunkers had an average fuel-efficiency of 24.9 miles per gallon, compared with an average of 15.8 mpg for trade-ins, a 58 percent improvement.

American companies accounted for all the top-10 traded-in vehicles. The Ford Explorer four-wheel-drive was the most popular, followed by the Ford F-150 Pickup two-wheel-drive, the Jeep Grand Cherokee four-wheel-drive and Ford Explorer two-wheel-drive.

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