The popular Cash for Clunkers program generated nearly 700,000 new car sales during the past month, giving the U.S. auto industry a badly needed jolt of activity during the deepest decline in auto sales in two decades.
The government, releasing final data on the car incentives, said Wednesday that dealers submitted 690,114 sales totaling $2.88 billion, bringing the program to a close under its $3 billion budget. Japanese auto manufacturers led American companies in new car sales through the program, which ended late Monday.
Many dealers are still waiting to be repaid for the Cash for Clunkers incentives they gave car buyers and were allowed to submit paperwork seeking reimbursement until late Tuesday.
Despite the summertime frenzy at dealerships, analysts said the growth in auto sales may be short-lived. Sales in July rose to 11.2 million when converted to an annual rate, the first month in 2009 in which sales had risen above the 10 million level. A drop in consumer confidence late last year sent sales plunging to depths not seen since the early 1980s, prompting lawmakers to create the program.
Jeremy Anwyl, CEO of the auto Web site Edmunds.com, said dealers and automakers clearly gained from the big boost in sales. But while the incentives helped consumers, average prices for vehicles went up as buyers less concerned about prices rushed to take advantage of the rebates.
Inventory shortages from the popular program could keep prices high and drive down new vehicle sales. "We have created a sales bubble and now that bubble has burst," Anwyl said.
The Obama administration declared the program a major success, saying Cash for Clunkers provided a needed stimulus to the auto industry and the broader economy.
"Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment," said Transportation Secretary Ray LaHood.