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Aug. 31 (Bloomberg) – U.S. auto sales in August probably will run at the highest rate since April 2008 after the federal government’s “cash for clunkers” rebates fueled demand.

The so-called seasonally adjusted annual rate for this month will be 14.3 million, the average estimate of 10 analysts surveyed by Bloomberg. The figure, an industry benchmark, hadn’t exceeded 10 million in 2009 until the incentive program began in July. Ford Motor Co. may post the biggest monthly sales gain.

Dealers whittled their inventory after purchases of almost 700,000 vehicles through the Car Allowance Rebate System. Sustaining August’s sales pace will be a struggle for the rest of the year now that the government cash is gone, said Joe Barker, an analyst at consultant CSM Worldwide Inc.

“The CAR program has far exceeded most expectations,” said Barker, who is based in Farmington Hills, Michigan. “A sizeable portion of the demand spikes in July and August were pulled forward from September and the fourth quarter.”

August sales results, released tomorrow, will reflect more than three weeks of transactions under the clunkers program, which ran from July 27 through Aug. 24. Buyers of new, more fuel-efficient autos were eligible for as much as $4,500 for trade-ins of older models.

Ford’s sales probably jumped 33 percent, according to 8 analysts. Toyota Motor Corp.’s 8.9 percent increase and Honda Motor Co.’s 3.2 percent climb would be their first gains this year, based on estimates from 4 analysts.

GM, Chrysler

General Motors Co. fell 16 percent and Chrysler Group LLC dropped 5.5 percent, according to 8 analysts. Neither automaker had a vehicle among the 10 best sellers under the government program. Nissan Motor Co., with 1 vehicle among the top 10, slid 8.8 percent, according to four analysts.

The annual sales rate is important to the auto industry because manufacturers, suppliers and dealers use it to compare monthly totals by taking into account seasonal buying patterns. The rate, known as SAAR, is an estimate of full-year deliveries based on an extrapolation from any given month.

U.S. auto sales fell to 13.2 million in 2008 after averaging 16.8 million this decade through 2007.

August vehicle purchases under the clunkers program may have totaled 525,000, Christopher Ceraso, a New York-based analyst with Credit Suisse, wrote in an Aug. 27 note. Of those transactions, about 15 percent would have occurred in August without the incentive program, he wrote.

Production Increases

Ford, GM, and Honda cited the popularity of the federal offers in announcing production increases, while suppliers such as Johnson Controls Inc. are making parts to meet the new demand. The increases boosted consumer spending and will create 42,000 jobs in the second half of 2009, the Treasury said.

August sales may total 1.41 million vehicles, or 13 percent more than a year earlier, Brian Johnson, a Chicago-based analyst with Barclays Capital, wrote in an Aug. 27 note. Meeting that mark would give the industry the first year-over-year gain since October 2007.

A slump in sales after the clunkers rebates ended showed how hard it will be for the industry to replicate its August results. After running at an annualized rate of 15 million early in the month, sales tapered to a pace of 8 million by last week, said Michelle Krebs, a senior analyst at Santa Monica, California-based Edmunds.com.

“We think it’s a bubble, and the bubble’s burst,” she said. “September could be really tough, maybe even October.”

Even with that decline, second-half sales will exceed those in the first six months of 2009, Krebs said.

‘Demand Fundamentals’

More than 10 million vehicles will be sold this year, as “demand fundamentals continue to improve,” and a “reasonable portion” of people that participated in the program weren’t initially shopping for a new car, Patrick Archambault, a Goldman, Sachs & Co. analyst, wrote in a note Aug. 27.

The Conference Board’s confidence index rose to 54.1 in August, the first gain since May, as consumers became less concerned about the outlook for jobs, the New York research group said Aug. 25.

“Improved consumer confidence and credit availability over the past six months have combined with the CARS program to lift industry sales out of their slumping year-to-date levels,” Gary Dilts, senior vice president at Westlake Village, California- based research firm J.D. Power & Associates, wrote in an Aug. 20 report.

Buyers favored cars over light trucks because of the U.S. incentives, Himanshu Patel, a New York-based JPMorgan Chase & Co. analyst, wrote in an Aug. 25 note. Cars represented 52 percent of U.S. auto sales in the first seven months of 2009, according to Autodata Corp. of Woodcliff Lake, New Jersey.

Toyota, Honda

Toyota, based in Toyota City, Japan, accounted for 19 percent of vehicles purchased under the rebate program, the most of any automaker, the Treasury said. Tokyo-based Honda had 13 percent and Nissan, also based in Tokyo, had 8.7 percent. Vehicles from Seoul-based Hyundai Motor Co. made up 7.2 percent.

GM, Ford and Chrysler autos made up about 39 percent of clunkers sales, less than the companies’ 45 percent share of the U.S. market through July.

The projected August sales gain for Ford compared with a year earlier probably was driven by new-vehicle introductions such as the revamped Taurus and Fusion, and low sales in August 2008, according to Archambault, the Goldman Sachs analyst.

Ford, based in Dearborn, Michigan, fell 18 cents to $7.55 at 9:53 a.m. in New York Stock Exchange composite trading. The shares have more than tripled this year.

Article courtesy of Alex Ortani, Bloomberg.com

The final scorecard is out on the Cash for Clunkers program: In return for taking on $2.88 billion in additional debt, Uncle Sam helped the auto industry sell 690,000 new vehicles. Whether this was a winning trade is debatable, as this MoneyWatch story points out and this post How Would We Figure Out Whether Cash For Clunkers Makes Sense? by economist Brad DeLong. But as a morale builder, it was hard to fault.

Economists note that almost all transactions that happened under Cash for Clunkers would eventually have happened anyway. Maybe the program converted some used-car sales into new-car sales, which means a little more use for the car makers’ factory capacity and a few more laid off autoworkers put back to work. And as White House economic adviser Brian Deese puts it in this WSJ interview, there may be some stimulus value to drawing some sales from the future when (we hope) the economy won’t need juicing, into the present, when it desperately does. But all that is offset by the increased budget deficit, the destruction of usable inexpensive cars, and the heavier debt burden on the new car owners.

For my money, though, the most overlooked benefit of the program has been its effect on the intangible economic force John Maynard Keynes calls “animal spirits.” For weeks, the news and blogosphere have been loaded with images of busy car salespeople explaining that they were selling out of the Ford Focus (when did you think you’d hear that?). Car shoppers appeared on camera with an acquisitive gleam in their eyes that has been in hiding since 2007. And we were treated to the vision of a federal stimulus program that actually seemed to be working. If you wanted to persuade consumers that the economy really is starting to recover, you couldn’t buy more convincing advertising.

Animal spirits, by their nature, aren’t easily measured. But Tuesday’s consumer confidence survey results did register a far greater rebound in optimism than economists expected. (The survey was taken in early to mid-August, when it was becoming clear that Cash for Clunkers would burn through another $2 billion, easy.) Interestingly, consumers say they believe that the economy is still in terrible shape. But their faith in the future has risen to levels not seen since before the recession began. Faith doesn’t easily yield to a cost-benefit analysis, but It’s hard to overstate its economic importance, as Nobel prize-winning economist George Akerlof points out in this MoneyWatch.com video.

Obviously, Cash for Clunkers didn’t account entirely for the jump in consumer confidence, and there’s no guarantee that it won’t fade again, especially if unemployment refuses to fall. But confidence is a necessary condition to arecovery. So to the extent that the clunkers program gave Americans a reason to believe that things can eventually return to normal and to have some faith that government stimulus can work, it was a pretty good investment.

Article Courtesy of Eric Schurenberg, CBS MoneyWatch.com

I am in a pretty unique situation where I have to constantly watch what I say in front of my clients. I tend to be very opinionated and very direct, so when it comes to my true feelings on social subjects, political views and personalities, I usually keep those to myself.

It can be hard when you want to verbally abuse some man that you see in a restaurant wearing a pink pair of Croc’s. Or you see a 300-plus pound woman driving a Honda Fit. Even comments about sales people in some dealerships who dress like they work behind the counter at a hair salon never can creep out.

But one thing that will, one thing that just continues to amaze me to no end… People who walk through an airport wearing one of those travel neck pillows around their neck. I always take advantage of an airport shoeshine booth – so I get to do a lot of people watching, but these people are so far beyond me. How can you walk around and have people see you with one of these goofball contraptions around your neck. I wouldn’t even let people see me on the airplane with one, but I realize everybody is different.

It is kind of like the Kia Soul – I guess the same people that would ride around in this car maybe the type who would walk around an airport with a pink pillow around their neck.

At least Kia has found a small, yet goofy target market for what is the “Travel Neck Pillows of the super-sub-compact-vehicle line.”

As previous blogs have noted, demand is higher than supply, which makes now a time for an upcoming reduction in new vehicle sales. Dealers have been complaining about the high auction prices in the last 12 months, but now may be a good time to be at every sale possible and start buying precious inventory before the prices get too high.

You can certify new vehicles for GM, Toyota, Chevy, Nissan, Chrysler – Jeep – Dodge and others and with low cost of certifying and great selling points of warranty now may be an excellent time to do just that.

It has changed from a Government Car Game to a Gross Game.

Start finding more ways – certifying used vehicles is another way to go. And in some cases you can even get co-op money for these.

 lot of indicators out there are going to say different things about what the last 45 days and “Cash For Clunkers” has done to drive the prices of cheap used cars. 

Here are some brief points that some of you may have forgotten:

• January 09 – New Vehicle Crush Rate was HIGHER than New Vehicle Retail Sales Rate
  
• February 09 – New Vehicle Crush Rate was HIGHER than New Vehicle Retail Sales Rate
  

 
Fast Forward to July – August 09:  Somewhere over 600,000 cars will be taken off the streets in a new car market that even with a strong recovery will still be off probably around 30% for this year vs. last year (which by the way, was no gem either).  
 
What this indicates to me is we should be prepared to go after more used cars (especially the under $9,000 transaction price cars) in order to keep turning inventory, fueling the shop and parts departments and keeping the sales people rolling. While the car market showed a quick come back to life – people are still less financially stable than they had been before. They are still shopping value, discount and price, and settling for what they wouldn’t have a few years ago.

You Can Move a LOT of Metal by Throwing Stupid Money into Trades.

Officially it has ended but the edgier dealers are finding ways to continue the allure of cash for clunkers. The lesson everyone can learn from this is what to expect customer reaction to be by throwing more money than is warranted into trades. At least taxpayer money went to something that the people who pay a lot of taxes can actually see and that is tremendous results. The other thing is, when working on market share and shaping the process of molding a new car business during a terrible market – we now see what can affectively drive the market.

The never-ending 24-hour news cycle does make you question how much longer newspapers will still be delivered.

The death of Ted Kennedy is just a reminder of how fast we have been conditioned to get our news. I rarely share personal stories, but I woke up before 6am in Orlando, Florida, on Wednesday – TV was still on FOX news from night before and they were talking about the death of Ted Kennedy. By the time The Today Show and GMA came on, the stories and videos were streaming complete with narration and archived photos. By 8am, I saw the first Facebook comments about people feeling bad for his family.

I landed in Dallas at 7pm that evening and saw more info on FOX news. Then I picked up a copy of the Dallas newspaper in the lobby of the hotel. As I was reading the front page, I realized that it was that morning’s paper and the story of Ted Kennedy’s death was not shown.

Newspapers need to be going online, but will the same masses of people go to the web to read them as are used to having them delivered? Even the post office is laying-off 50,000 people due to online bill paying and the eCommerce movement. 

What is the future of the newspaper? 

I don’t have the answer, but sure can’t wait to see. 

Popular month long program came under $3 billion budget

WASHINGTON – Cash for Clunkers generated nearly 700,000 new car sales and ended under its $3 billion budget, the Transportation Department said Wednesday.

Releasing final data, the government said dealers submitted 690,114 vouchers totaling $2.88 billion. New car sales through the program ended late Monday and dealers were allowed to submit paperwork to the government until late Tuesday.

Japanese automakers Toyota, Honda and Nissan accounted for 41 percent of the new vehicle sales, outpacing Detroit automakers General Motors, Ford and Chrysler, which had a share of nearly 39 percent. Toyota Motor Corp. led the industry with 19.4 percent of new sales, followed by General Motors Co. with 17.6 percent and Ford Motor Co. with 14.4 percent.

Read the full article by The Associated Press here.

Dealer: ‘That’s about as good as it gets… It’s going out with a bang’

It was a race to the finish for dealers and customers alike as the government’s Cash for Clunkers program headed into its final lap on Monday.

Over the weekend, car dealers across the country watched their lots grow empty as crowds rushed to trade in gas guzzlers after the government said that the $3 billion rebate program would end at 8 p.m. EDT Monday, two weeks earlier than expected.

Excerpt from Associated Press. Click here to view the full article.