Car Sales Are Down Sharply

Cash for Clunkers, which reported sold nearly 690,000 car units helped significantly to lift the car sales of Toyota, Honda, Ford, GM and Chrysler. While all of these car makers reported increase in sales from their June numbers, the question is, will this pace of car sales sustain itself without the cash injection from the government.

First let's see who did what. Ford today informed that its sales are up 17 percent compared to August 2008. Toyota reported that car unit sales are up 6 percent. GM and Chrysler respectively reported 20 and 15 percent decrease in sales compared to August 2008, but these companies were going through difficult times and the decline was not as bad as analysts had predicted.

However, CNN quotes Edmunds.com that "sharp declines in sales during the last week of August have raised doubts about the outlook for sales for the remainder of the year." That's what Edmunds' senior analyst Jessica Caldwell told CNN.

Another problem is that after such a great success most dealerships are low in their inventory of new cars. However, it is expected that the signs of improvement that are already observed in the economy should help to offset the sales vacuum created after the Cash for Clunkers program.

What can the car industry do?

They can come up with their own incentives. Some of them may be zero percent financing. Giving their own stimulus packages with cars. I remember in past recession the housing industry would give free pools with houses just to sell them. Now, perhaps the dealerships and car makers can come up with their own extras to move the cars.

Written by Armen Hareyan