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Automotive Consumer
AUTOS: Cash For Clunkers Still Skewing Sales
August results will show slow recovery rate after robust Clunkers effect last year.
SPEED Staff  |  Posted August 27, 2010   Washington, D.C.
Cash for Clunkers helped boost auto sales over last summer, but analysts say the cost was high. (Photo: Getty Images)
The distortion in U.S. auto sales caused by last year’s Cash for Clunkers program has resulted in some disappointing predictions for this year’s August sales and the industry’s recovery rate.

According to the industry analysts at Edmunds.com, the monthly sales totals that will be reported by the manufacturers on Wednesday are expected to be 1,028,200 units, a 17.7 percent decrease from August 2009 and a 1.4 percent decrease from July 2010.

That would put August's Seasonally Adjusted Annualized Rate at 11.8 million, up from 11.5 in July 2010 but down from expectations.

“Based on the pattern of previous recessions, new car sales should have recovered 71 percent from 2009's low point, delivering a SAAR of 16.6 million units by this June,” said Edmunds.com senior analyst Karl Brauer in his AutoObserver.com report What’s Really Holding Back the Auto Industry? “However, not this time and the same factors depressing the recovery in auto sales over the past year are likely to continue for the foreseeable future, keeping sales in the 12-million unit range even through next year.”

August 2010 had 25 selling days, one less than last August 2009. When adjusted for this difference, sales decreased 14.4 percent from August 2009, when Cash for Clunkers was boosting sales.

"Comparing to last August is not meaningful since Cash for Clunkers distorted the market so badly last year," said Jessica Caldwell, director of industry analysis for Edmunds.com. “It is likely that the current slow sales pace can be partly attributed to the thousands of ‘pull-ahead’ sales that last year’s CARS program stole from subsequent months.”

August estimates bring mixed news to the domestic brands, with the combined monthly U.S. market share for Chrysler, Ford and General Motors domestic nameplates expected to be 43.4 percent in August 2010, up from 41.2 percent in August 2009 but down from 43.8 percent in July 2010.

Chrysler will show a gain in market share from the dark days of August 2009, but Ford and GM will sustain loses, the analysts say. But again, Cash for Clunkers skewed the results since it tended to favor the import brands’ fleet of small, fuel-efficient cars, so the leading Japanese brands show major unit-sales losses compared with August 2009.

Edmunds.com predicts that:

• Chrysler will sell 98,100 units in August 2010, up 7.3 percent compared with August 2009 and up 6.4 percent from July 2010. This would result in a new car market share of 9.5 percent for Chrysler in August 2010, up from 7.3 percent in August 2009 and up from 8.8 percent as in July 2010.

• Ford will sell 159,500 units in August 2010, down 10.5 percent compared with August 2009 and down 3.2 percent from July 2010. This would result in a new car market share of 15.5 percent of new car sales in August 2010 for Ford, up from 14.3 percent in August 2009 but down from 15.8 percent in July 2010.

• GM will sell 188,100 units in August 2010, down 23.1 percent compared with August 2009 and down 5.8 percent from July 2010. GM's market share is expected to be 18.3 percent of new vehicle sales in August 2010, down from 19.6 percent in August 2009 and down from 19.1 percent in July 2010.

• Honda will sell 116,300 units in August 2010, down 27.6 percent from August 2009 but up 3.4 percent from July 2010. Honda’s market share is expected to be 11.3 percent in August 2010, down from 12.9 percent in August 2009 but up from 10.8 percent in July 2010.

• Nissan will sell 76,900 units in August 2010, down 26.5 percent from August 2009 and down 6.6 percent from July 2010. Nissan's market share is expected to be 7.5 percent in August 2010, down from 8.4 percent in August 2009 and down from 7.9 percent in July 2010.

• Toyota will sell 161,400 units in August 2010, down 28.3 percent from August 2009 and down 4.6 percent from July 2010. Toyota's market share is expected to be 15.7 percent in August 2010, down from 18.0 percent in August 2009 and down from 16.2 percent in July 2010.

Read Karl Brauer’s report about the lagging auto recovery at Auto Sales.

Edmunds.com CEO Jeremy Anwyl reflects on Cash for Clunkers one year later at Clunkers.

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