Ford Posts 2% Sales Gain in July

Ford Motor (F) posted a 2% sales gain for July over the same month a year ago, the first monthly sales gain the automaker has posted since 2007, the company reported on Aug. 3.

Company officials attributed the sales gain to the federal "cash for clunkers" program, as well as a feeling among a growing number of consumers that the worst of the recession is behind them. They said sales of fuel-efficient vehicles were strong.

"We had another strong month in progress before the 'cash for clunkers' program started," said Ken Czubay, Ford vice-president for U.S. marketing, sales, and service, in a news release.

The cash for clunkers program, signed into law in late June, allowed dealers in July to give consumers with old vehicles not worth much in a trade an additional $3,500 or $4,500 above their own incentives, courtesy of the U.S. taxpayer. The program, modeled after similar programs in Europe, is part of the economic stimulus.

Second Funding Bill Under the program, a buyer who trades a vehicle that gets 18 miles per gallon or less for a car with a mileage improvement of more than 4 mpg but less than 10 mpg is eligible for $3,500; a buyer whose new vehicle is rated 10 mpg or better than the old one is eligible for $4,500. An old pickup truck can be swapped for a new one with just a 2 mpg improvement for $3,500. If the pickup or SUV being bought has a mileage improvement of 5 mpg or more, the benefit is $4,500. Heavy-duty trucks and some commercial vehicles have different rules. The trade-in vehicles have been old with high mileage because there is no other trade-in value on the car, unless automakers and dealers add to the government rebates (which most have).

The clunkers program is estimated to have been a part of more than 200,000 sales in July. It proved so popular that the House of Representatives scrambled on Friday to pass a bill authorizing an additional $2 billion. The first $1 billion was exhausted on Friday after just a week of the government processing applications. The U.S. Senate will take up the vote this week. President Obama has said he will sign the bill.

Some senators, mostly Republicans, opposed the clunkers program, complaining that taxpayers are subsidizing auto sales that would have occurred anyway. The program is proving to be so popular with voters, though, that passage seems likely. Although the bill was written to give preference to people trading in old pickup trucks and full-size SUVs for new ones, the results favored cars. The top vehicle traded in under the clunkers program was the Ford Explorer SUV, most of them from the 1990s when Ford was selling around 400,000 a year. The top vehicle purchased under the program was the Ford Focus. There were no pickups in the top 10 vehicles purchased under the program. And there was only one SUV, the Ford Escape crossover, which is offered in a hybrid version.

Ford's retail sales, which excludes sales to rental car and business fleets, were up 9% from July compared with the same month last year. Ford shares were up over 6% in mid-day trading on The New York Stock Exchange.

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