Cash for Clunkers program spurred vehicle sales

The Cash for Clunkers program gave a much-needed shot in the arm to Virginia automobile dealers who have watched their sales slip for nearly two years.

Sales of cars and trucks at Virginia car dealers jumped 16 percent last month compared with the same month a year ago, according to data from the Virginia Automobile Dealers Association.

“We haven’t seen a month that good since August 2007,“ said Michael Allen, a spokesman for the dealer group.

The big sales jump, though, has caused a shortage of vehicles at area dealerships. Many are waiting on manufacturers to replenish their lots.

Before the Cash for Clunkers program began in late July, sales in Virginia for the first seven months of 2009 were down 18.5 percent compared with the same time period last year.

Virginians bought 38,596 vehicles under the clunkers program, Allen said. The program ended Aug. 24.

Eddie Stiles, general manager of Luck Chevrolet in Ashland, said he sold about 18 more vehicles in August than the 35 the dealership usually averages in a month.

“We were unbelievably busy,“ Stiles said.

His store sold about 34 vehicles under the clunkers program.

The program drew buyers into quiet showrooms by offering up to $4,500 toward new, more fuel efficient cars and trucks.

The program spawned a rush on dealers across the country.

Nationally, about 1.3 million vehicles were sold, an increase of about 1 percent compared with August 2008. It was the first year-over-year monthly sales gain since October 2007.

Sales rose 30 percent from July.

George Hoffer, a professor of economics who studies the automobile industry at Virginia Commonwealth University, said the high sales volume has caused an inventory shortage, which could kill whatever momentum the clunkers program created.

“The industry is not in a good position to take advantage of it,“ he said.

Still, he believes the program worked. “It clearly served its purpose as a stimulus,“ he said.

The clunkers program boosted sales at Ford, Toyota, Honda and Hyundai in August as consumers snapped up their fuel-efficient offerings.

Chrysler and General Motors endured another month of falling sales, although their high-mileage vehicles did better. Chrysler’s sales fell 15.4 percent; General Motors’ sales fell 20.1 percent.

Two of Ford’s vehicles—the Focus and Escape—were among the top-selling cars under the clunkers program. Sales of the Focus rose 56 percent, while those of the Escape crossover vehicle climbed 49 percent.

Japanese automakers Toyota Motor Corp. and Honda Motor Co. also posted year-over-year gains in August. Toyota’s sales rose 6.4 percent, lifted by small cars such as the Corolla, the best-selling clunkers vehicle. Honda’s sales rose 9.9 percent.

Both Hyundai and Subaru saw sales jump more than 50 percent.

Locally, McGeorge Car Co.‘s Toyota dealership sold about 213 vehicles under the program. Richmond Ford had about 125 deals. Universal Ford inked 30 deals, and Bill Talley Ford had 53 deals.

Ford, Lincoln and Mercury dealers in the Washington region, which includes Richmond, reported a 40 percent sales increase in August compared with last year, the automaker said. Ford’s sales in the Richmond area were up in 31.5 percent versus August of last year.

GM’s performance last month was a major disappointment, Hoffer said. No GM vehicles made the closely watched list of top-10 Cash for Clunkers sales.

“Chrysler, I could see, because they had so few saleable vehicles under Cash for Clunkers. But I’m dumbfounded by GM. They were dead in the water,“ he said.

Hoffer blamed GM’s drop on the aftereffects of its bankruptcy, the disruption to its dealer base after announcing several hundred closings, and the impending elimination of its Saturn and Pontiac lines.

The Associated Press contributed to this report.