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Scrap plan boosts US car sales

City A.M. Reporter
US car sales boomed in August as consumers burned through $3bn (&pound;1.8bn) in government incentives, leaving carmakers to contend with both inventory shortages and uncertain demand in the months ahead.<br /><br />The now-exhausted US &ldquo;clunkers&rdquo; programme, which was inspired by the programmes in France and other European markets, drove a rush to dealerships in late July and the first three weeks of August.<br /><br />On the annualised basis tracked by the industry and investors, industry-wide US sales appeared to have topped 14m units in August based on initial sales results.<br /><br />That would be the highest sales rate of 2009, and the first sales increase since October 2007, although it remains well off the 16m sales rate that had held in the US market until 2007.<br /><br />Car sales data from Europe show that the industry benefited from scrapping incentives in August.<br /><br />Meanwhile, as concerns grow about the future of the market when the incentives run out, France said it might extend its scheme beyond year-end.<br /><br />French car sales rose seven per cent year-on-year in August to 110,607 units, France&rsquo;s carmakers&rsquo; association said. But sales of light utility vehicles, many of which are not eligible for the scrapping bonuses, fell 24.9 per cent.<br /><br />Budget Minister Eric Woerth said yesterday that the government incentive scheme, which offers &euro;1,000 to eligible buyers, could be extended beyond December.<br /><br />The minister in charge of implementing the government&rsquo;s economic stimulus package, Patrick Devedjian, said last week the scheme had generated the sale of 330,000 vehicles.