2009 July Auto Sales: Thanks, Uncle Sam!

The federal government’s cash-for-clunkers program (official acronym: C.A.R.S.) kicked off on July 1st, and it gave the auto industry its best sales month in nearly a year. Total light vehicle sales for July were just shy of 1 million units, a milestone the industry hasn’t topped since August 2008.

According to NHTSA, some 245,000 consumers (through August 7th) took advantage of the $3500 and $4500 federal cash incentives. Even so, July auto sales surpassed June figures by only 138,000. Presumably, then, quite a few of the clunkers’ cash recipients would have bought a new car anyway.

Even with the fat federal stimulus, the 998,062 auto sales were well below the 1,136,476 recorded in July 2008 – a figure that, at the time, was considered pretty dismal. How little did we know.

Since consumers all but drained the feds’ initial $1 billion allocation in only a month, Congress has tossed another $2 billion (hey, it’s only money) into the kitty. The program is scheduled to run until November, but some industry observers expect the dough to run out as early as Labor Day, with additional funding unlikely. So, while carmakers may enjoy a similarly stimulated August, come fall, the hangover from this party could be nasty.

MAJOR MOVERS (sales increases/decreases of 25% or more versus June)

10 Big Winners in the Cash-for-Clunkers Bonanza
There’s some confusion about which cars and trucks saw the most clunker-cash-subsidized sales (because the government reports separate models by powertrain), but it’s clear these clunkers-cash-eligible models enjoyed the biggest volume gain, percentage-wise, over June.

{{{Chrysler PT Cruiser}}} +271%
Dodge Avenger +143%
Dodge Caliber +121%
Chevrolet Aveo +124%
Pontiac G3 +114%
Scion xD +109%

The top 3 sales gainers in July were all from Chrysler, which added its own money to effectively double the government incentive, driving new-car prices down into four figures for some buyers. At General Motors, the relatively high-mpg new benefited from a very timely arrival, while artificially stimulated demand for the tiny Aveo even spilled over onto its lame-duck Pontiac twin, the G3.

As Intended, Sales of Small Cars Surge

Suzuki SX4 +76%
Pontiac G5 +63%
Nissan Cube +54%
/Matrix +48%
Mazda3 +47%
Chevrolet Cobalt +38%

Swapping gas hogs for more efficient new vehicles was a major goal of the “clunkers” legislation. And the increase in the sales of so many small cars suggests that, to some degree at least, it succeeded.

Mostly Modest Moves for Mid-Sizers

Chrysler Sebring +59%
Mitsubishi Galant +38%
Mazda6 +37%

Clunkers trades also precipitated a move from trucks and SUVs to cars, and these mid-size sedans appear to have benefited.

A Boost for Compact SUVs and Pickups

{{{Suzuki Grand Vitara}}} +75%
Mazda Tribute +63%
Honda CRV +40%
Chevrolet HHR +36%
Suzuki Equator +33%

With the majority of the clunkers trade-ins being SUVs and pickups, it was natural for their former owners to trade down to a smaller, more efficient version of the vehicle they previously owned.

Minivans: Both Up and Down

Mazda5 +61%
Dodge Caravan +44%
VW Routan -36%
Kia Rondo -37%

You’d think minivans would have enjoyed some clunkers bounce from families trading in SUVs, and that may have been the case for the economical Mazda5, the Dodge Caravan (but not its VW twin), and the Toyota Sienna. Compared to the Mazda5, the Kia Rondo suffered because it is classified as a passenger car rather than a truck and so must meet a higher mpg threshold (which only the four-cylinder version does) in order for buyers to collect clunkers cash. But what happened to the Honda Odyssey?

Some SUVs: Surprising Beneficiaries

Suzuki XL7 +53%
XL +48%
Chevrolet Avalanche +29%

Toyota was able to capitalize on the Highlander’s and the Venza’s rebate eligibility, as was Suzuki with the XL7. But what’s perhaps more surprising is that the heavy-duty versions of GM’s big-boy SUVs and its Avalanche pickup also could net their buyers government cash, under certain circumstances (basically, the buyer trading in another big truck/SUV).

Upswings That Had Nothing to do With C.A.R.S.

Range Rover +138%
Mercedes-Benz E-class +100%
Mercury Grand Marquis +63%
BMW 7-series +43%
{{{Lincoln Town Car}}} +30%

The Range Rover, E-class, BMW 7-series, and Z4 all earned their increases the time-honored way: by bringing out a new model. What about the gains for the Cayenne, the R8, the 911, the X6, and the A8? Maybe it was the reopening of the Wall Street bonus spigot.

Losers: Thirsty Sedans

Cadillac STS -71%
Kia Amanti -66%
Cadillac DTS -45%
{{{Saab 9-5}}} -38%
Buick Lucerne -35%
Pontiac G8 -34%

None of these met the program’s mpg threshold (although some were too expensive to qualify anyway), and they suffered for it.

Losers: Thirsty SUVs

Range Rover Sport –57%
GMC Envoy -43%
Chevrolet TrailBlazer -42%
Mercedes-Benz M-class -29%
Jeep Liberty -25%
Hummer H3 -25%

With the exception of the smaller-engine, two-wheel-drive version of the Sorento, these SUVs were all too thirsty (or too expensive) to get in on the big cash giveaway. That might not have been much of a consideration for Range Rover Sport shoppers, who might have been awaiting the soon-to-arrive 2010 version.

Sagging Sports Cars

Pontiac Solstice -30%
Saturn Sky -29%

The Solstice and Sky have just recently ended production, so we wouldn’t expect to see any sales increases in the months ahead. Chevrolet product planners would never admit it, but the Corvette could be suffering a bit at the hands of the new Camaro. So might the Challenger as well; or, maybe Dodge dealers were so busy shoveling incentive money at Caliber and Avenger shoppers that they didn’t have much time for the Challenger.

C.A.R.S. Candidates That Couldn’t Convert

Mitsubishi Raider -75%
Saturn Outlook -47%

You know you’re having a bad month when the federal government steps in to hand at least some of your potential buyers $3500 or $4500, and you still sell fewer cars than last month.

Special Loser of the Month

Mercedes-Benz R-class -95%

Whoa. Mercedes-Benz R-class sales came to a screeching halt in July. All of 36 were sold, which is fewer than G-wagen sales (the R-class typically outsells the G-wagen 10 to 1). Looking at it another way, Mercedes sold more than 23 times as many examples of the GL-class SUV as it did the R-class. The R-class has been a weak seller for a long time, but not this weak; one year ago, for instance, 750 rolled off dealer lots. Undaunted, Mercedes-Benz is not giving up on the R-class; a refreshed version is on its way for 2010.

TOP 5 BESTSELLING VEHICLES (and prior month rank)

#1 30,037 (up from #5)
#2 29,774 (up from #4)
#3 /Matrix 29,593 (up from #6)
#4 33,974 (down from #2)
#5 Ford F-series 36,327 (down from #1)

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