Cash-for-Clunkers Boost Japanese Car Sales, Not US

The US’s cash-for-clunkers scheme, designed to bolster Detroit’s embattled carmakers, is turning out to be an even bigger boon for their Japanese rivals. According to data published by the National Highway Traffic Safety Administration on Monday, Americans are using the scrappage incentives to buy more vehicles from Toyota than any of the three Detroit carmakers. Toyota has an 18.9 per cent share of vehicles bought so far, putting it ahead of General Motors with 17.6 per cent and Ford with 15.4 per cent. Chrysler is in fifth place, after Honda.

GM had a 19.6 per cent share of the overall US light-vehicle market in the first seven months of this year, compared with Toyota’s 16.3 per cent, according to Autodata, a New Jersey-based market research firm.

The top models bought since the scheme began on July 24 are the Toyota Corolla, Honda Civic and Ford Focus, all small sedans. Three of the top five are Toyotas.

The popularity of smaller models underlines the price paid by the Detroit companies for their strategy to all but cede the passenger car market to their foreign rivals during the 1990s as they concentrated on bigger and more profitable sport-utility vehicles, pick-up trucks and minivans.

All ten of the most traded-in clunkers are Detroit-made vehicles in these three segments.

GM and Chrysler are battling to regain market share following their court-supervised restructurings earlier this month. Furthermore, they have struggled to keep dealers stocked with the usual variety of models and options, having shut down much of their North American operations during their journeys through bankruptcy protection.

Credit Suisse estimates that Chrysler’s car inventories tumbled to 34 days supply at the end of July from 60 a month earlier. Its small Dodge Caliber is virtually sold out. A stock of 55-60 days supply is considered normal.

Under the cash-for-clunkers scheme, modeled on similar incentives in Europe, buyers who trade in old vehicles for those with lower fuel consumption receive a rebate of $3,500 or $4,500, depending on the fuel consumption of the replacement vehicle.

Congress initially earmarked $1bn for the incentives, but rushed to add another $2bn within a fortnight of the scheme’s introduction.

Analysts expect that the funds will last until early September, supporting the purchase of 700-750,000 new vehicles.

Toyota and its Asian rivals have sought to allay some politicians’ concern at the benefits they are reaping from the scheme by noting that a sizeable chunk of their vehicles are built in North America.

{The Financial Times Limited/Matzav.com Newscenter}