America’s brief $US3 billion ‘Cash for Clunkers’ car scrappage scheme has failed its basic test: it didn’t produce an industry- wide improvement in sales, especially for the two US government restructured giants, General Motors and Chrysler.
Foreign producers like Toyota and Hyundai got significant boosts, as suspected from early figures, Ford was helped, but General Motors and Chrysler both saw lower than expected sales.
In fact the clunkers scheme pushed buyers towards more efficient, smaller cars produced by Asian car companies.
So Asian car groups grabbed an unprecedented 52.3% of all US car sales in August for the first time.
The fading Big three US groups, Ford, General Motors and Chrysler, saw their shares slide to a record low of 40.8%.
Now there are reports in the US from car industry tracking companies that the number of new customers visiting showrooms in the days after the scheme ended 10 days ago, has dropped sharply.
Car sales figures for August, released overnight in the US, show that sales rose, boomed even, but it was very uneven.
Preliminary figures show a 26% rise on July’s sales level and a 1% rise on August 2008, the first month on month rise for almost 2 years. Around 1.2 million vehicles were sold in the month, more than 690,000 were under the clunkers scheme.
It was part of a global upturn in car sales in many markets which have had similar schemes running: France saw a 7% gain in August car sales and the government said it would continue to fund its program to encourage consumers to swap out of old cars into 2011.
Japan’s domestic auto sales rose for the first time in 13 months in August, up 2.3%, not much, but enough for the industry.
Italy saw an 8.5% rise in sales, with Fiat, the new biggest shareholder in Chrysler, experiencing an 11% gain. But sales were flat in Spain, Europe’s third biggest car market. UK and German figures are out later in the week.
Hyundai reported a 25% rise in its August global sales compared with a year ago, with domestic sales up 23%, thanks to a car scrappage scheme running in South Korea. Its sales in the US jumped 47%
America’s scheme was introduced after the burst of enthusiasm in the first quarter for the German scheme which was due to expire at the end of this year, but which finished overnight because it had run out of money.
The biggest winners in the US sales bonanza were major Asian automakers and Ford, which benefited from a stronger line-up of smaller cars and crossover vehicles.
Ford was the major US winner, with its second solid month in a row and sales up around 17%.
Toyota Motor Corp and Honda Motor Co posted solid gains as well.
But the short-lived sales rush also ran down dealer inventories of popular vehicles like the Toyota Corolla, Honda Civic and Ford Focus and raised the risk of an equally abrupt drop in demand in September and the remainder of the year.
GM’s sales fell 20%, bigger than forecast and Chrysler’s sales fell 15%. Both companies had closed plants during their restructurings and are still re-organising, so they got caught short of stock, especially smaller cars to compete with the Toyota Corolla and the Honda Civic, which were especially popular, as was the Ford Focus, another small, more frugal model.
Toyota lifted sales by around 6.5% on a year ago, and Honda by almost 10% as they rode the clunker scheme for all it was worth.
Now Ford and Toyota are reported to be lifting production in the US to replenish rundown stocks, but GM and Chrysler are still re-organising.
