Clunkers help drive auto sales

DETROIT - Lured by the government's "Cash for Clunkers" program, car and truck buyers started returning to showrooms last month, as Ford Motor Co. reported its first U.S. sales increase in nearly two years and other major automakers said sales showed signs of stability.

Hyundai Motor Co. and Subaru of America Inc. joined Ford in the plus column. Chrysler Group L.L.C., which had been the worst-performing of the major automakers, managed a single-digit decline in July. If converted into an annual rate, overall industry sales could top 10 million cars and trucks for the first time in 2009. As recently as 2007, car and light-truck sales topped 16 million vehicles, but the recession, tight credit, and a lack of consumer confidence sent sales plunging late last year.

Ford, led by the redesigned midsize Ford Fusion, and strong sales of the Escape crossover vehicle and F-series pickup line, offered encouraging signs for industry analysts, who predicted a modest improvement in the second half of the year.

July sales of Ford, Lincoln, and Mercury light vehicles rose 1.6 percent from the same month last year. It was the first year-over-year rise since November 2007. Ford sold 158,354 vehicles, a 2.2 percent increase over June's figures, showing that the worst U.S. auto sales slump in a quarter-century may be easing.

Crosstown rival Chrysler posted a smaller year-over-year sales drop compared with recent months. The Auburn Hills automaker, which emerged from bankruptcy protection earlier this year, said its sales fell 9.4 percent and received help from heavy incentives and the "Cash for Clunkers" program.

General Motors Co., which joined Chrysler in bankruptcy court for a time, said its July sales fell 19 percent from last year. But that figure was weighed by a 47 percent drop in sales to fleet customers such as rental car companies. Retail sales fell a smaller 9 percent.

Subaru, which has headquarters in Cherry Hill, N.J., said its U.S. sales leaped 34 percent in July on sizable sales improvements for most of its models. Hyundai said its sales jumped 12 percent, while Toyota Motor Corp., whose sales have taken a beating in the downturn, posted a slower sales decline of 11 percent.

Honda Motor Co. Ltd., Japan's No. 2 automaker, said its U.S. sales fell 17 percent last month. Nissan Motor Co. Ltd. said its sales dropped 25 percent.

Tom Libby, an independent Detroit-area auto analyst, said the government rebate program provided a big shot in the arm to automakers at a time when it appeared overall sales may be stabilizing after months of sharp declines.

"It has psychologically had a huge positive effect for the industry, which is what it needed," Libby said.

But it remains unclear whether customers will keep buying cars when the program is over, he said. Often, demand falls off after large incentive programs end.