Cash for Clunkers Selling Efficient Cars
Take Ford, for example. In July, when the Cash for Clunkers program began, sales of the Fusion sedan — the four-cylinder base model gets a combined 25 mpg — were up 66%. The Focus, with combined mileage of 28 mpg — good enough for the full $4,500 rebate — saw sales go up 43.6%.
Ford’s hulking SUVs — the Explorer and Expedition — were down 42.5% and 26.1%, respectively. July 2008 saw sales drop 51.8% and 57.5%, respectively, from 2007 levels. This trend has continued since $4 gas hit in the summer of 2008. Basically, it shows that sales of large, truck-based SUVs might never return.
The same sales success hit small Korean cars like the Hyundai Accent — up 13% — and the Kia Soul, which was just introduced. Its sales of 4,853 bested boxy rivals the Nissan Cube (3,293 units) and Scion xB (2,838).
Some folks in Washington have also suggested that wealthy, upper-middle-class consumers are trading in their clunkers — which they’ve presumably kept stored and insured for years despite their wealth — for new cars and using the tax subsidy as a bonus. However, sales of entry-level luxury cars that come in under the Clunker maximum MSRP of $45,000 were down. The Mercedes-Benz C-Class was down 28.7%, and overall luxury brands saw sales stay at their same rate of decline as in previous months, unlike non-luxury automakers, who either saw an increase in sales — Ford, Kia, Hyundai and Subaru – or saw their losses lessen greatly — GM, Toyota and Chrysler.
There were two oddities that stood out to us in July’s sales numbers:
No. 1: Cash for Clunkers did nothing for sales of the fuel-efficient Smart car. Sales of the Smart — which starts at $12K — were down 44.6%. Only 1,418 were sold in July, and sales for the year are down 28.5%.
No. 2: Subaru saw sales of its all all-wheel-drive lineup skyrocket 34% in July thanks to Cash for Clunkers and the launch of the new Legacy sedan and Outback wagon, which haven’t even hit every state yet. While Subaru has been one of the only automakers to keep its head above water during the past year’s dismal sales slump, its lineup isn’t especially efficient, mainly because all its cars are equipped with all-wheel drive. The Impreza and Legacy with manual transmission get the program’s passenger-car bare minimum of 22 mpg combined, meaning anyone trading in a clunker for a Subaru car is likely to get only $3,500.The new Legacy and Outback have an optional CVT transmission which raises combined mileage to 26 and 24 mpg respectively.
The big question will be how August fares if Cash for Clunkers ends. Will consumer confidence spread regardless of government handouts?
