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Ford Posts U.S. Sales Gain, ‘Clunkers’ Cash Buoys Industry

Source: Bloomberg

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Posted on 04 Aug 09

Ford Motor Co.’s July U.S. sales rose 2.3 percent and Honda Motor Co. posted a 17 percent drop, as the government’s so-called cash-for-clunkers incentive may have helped the auto industry to its strongest pace this year.

Ford’s deliveries including the Volvo brand increased to 165,279 cars and trucks from 161,530 a year earlier, the Dearborn, Michigan-based company said in a statement today. Honda reported a decline to 114,690 from 138,744 and Chrysler Group LLC said its slid 9.4 percent to 88,900 from 98,109.

The Ford results may signal the start of a recovery for the industry. Analysts estimate that the annual pace exceeded 10 million for the first time this year. The government program, which offers as much as $4,500 for trading in older, less fuel- efficient vehicles, has run through the $1 billion available in about a week, and Congress is considering $2 billion more.

“We’re past the worst in the auto market, and I think we’re going to have a gradual improvement here,” said Maryann Keller, president of consulting firm Maryann Keller & Associates in Stamford, Connecticut, in a Bloomberg Television interview. “Ford is coming out of this recession as a brand winner.”

Analysts had estimated Ford would report a 6.1 percent decline, the average of 6 projections compiled by Bloomberg before the reports of demand created by the federal incentive, known as the Car Allowance Rebate System.

Ford, the second-largest U.S. automaker, hadn’t reported a monthly increase since November 2007.

Ford’s Focus small car is the top-selling vehicles under the government incentive program, according to the U.S. Transportation Department. Focus sales increased 44 percent in July to 21,830, the automaker said.

Clunkers’ Effect

The sales last month from the federal incentives may result in fewer buyers later this year after the program ends, George Pipas, Ford’s sales analyst, told CNBC today.

A similar program in Germany won’t sustain sales growth into 2010 as those incentives expire, said Matthias Wissmann, president of the German carmakers, today at a Frankfurt news conference. Germany’s car market expanded by 26 percent from a year earlier in the first half, propelled by increases of at least 40 percent in May and June.

U.S. Transportation Secretary Ray LaHood told C-SPAN yesterday that the Obama administration will continue the program until the Senate acts this week on more funding. The program recorded 80,500 sales through Aug. 1, an administration official said.

Annual Pace

The performance by Ford, the only major U.S. automaker to forgo emergency government loans, suggests the annual sales pace for July may be higher than the 10.1 million vehicles that was the average of 7 analyst estimates. The July 2008 rate was 12.5 million, according to data compiled by Bloomberg.

Ford’s said the rate last month may have been in the mid-11 million range.

Sales will decline 24 percent at Detroit-based General Motors Co. based on 6 estimates. GM exited bankruptcy July 10 and Chrysler, based in Auburn Hills, Michigan, emerged a month earlier, both with government assistance.

Toyota Motor Corp., based in Toyota City, Japan, probably will say U.S. sales fell 20 percent, the average of 3 analysts’ estimates. Nissan Motor Co., based in Tokyo, may say sales tumbled 29 percent, according to the estimates.

Volkswagen AG’s namesake brand reported a sales increase of almost 1 percent to 20,590. Daimler AG said combined sales of Mercedes-Benz and Smart fell 24 percent to 17,646.


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