Ford to Report Big Sales Increase: Does It Matter?

The WSJ is reporting that Ford (F) is going to show its first year-over-year sales increase since 2007 when it releases sales data today. Some analysts suggested that the seasonally adjusted annualized sales rate could be as high as 12 million. It has been running around 9.6 million units.

All of this is coming on the heels of “cash-for-clunkers” which was an unexpected success and is now technically out of money. The House passed a $2 billion extension to the program but it faces some opposition in the Senate. The administration has extended the program until Tuesday, but it ends after that subject to what the Senate does.

So, auto sales are going to get a good bump up when the reports come out today. It’s going to be one of the “yes, but what if?” sort of reports due to the “cash-for-clunkers” program. Many contend that all it's accomplishing is to move sales that would have occurred forward.

If that’s the case then the industry could be in for dismal late fall sales. As it is, I suspect the good sales news will be perceived positively, if not correctly.

Comments

[User 465420:]

GM's going to lay off another 10,000 UAW folks... After the fed just injected 50 Billion Dollars.. US economy is still broken. The longs are going to get their legs cut off soon.

JJ

Aug 03 11:56 AM

[Jobu37:]

Ford had already ramped up production prior to the bump in sales in July. In spite of that, they are still out of inventory on models like Escape, Focus, and Mariner.

Since there is demand for these models, with or without cash for clunker money, Ford will have to ramp up production even more. That in turn provides GDP growth which to answer your headlines question "Yes it does matter".

The uptick in July sales will also allow GM and Chrysler to start producing cars since they were able to move alot of their dead inventory that would still be sitting on lots two months from now were it not for the cash for clunkers incentive along with excessive rebates on top of it by Chrysler. So even these two will contribute to material GDP growth in the coming weeks and months.

Even Honda and Toyota will be having to rebuild inventories.

All these vehicles being built in August as opposed to October for GM and Chrysler will stimulate the economy two months early. Which is a good thing.

Aug 03 05:37 PM

[Oh come on now:]

It is a little difficult to guage this program's long term effect, since it is an unprecidented move for America. We continue to become more like the country our forefathers fought to free us from, it seems. The US free market was side stepped for the first time I can recall - for automobiles. Sure, this is the state of America, at this time, for the government to distort free markets.

I predict that auto sales will tank at the end of this program, whether extended or not. I hope the program is not extended. I feel that 'cash for clunkers' is just pulling ahead sales that would occur in the upcoming months anyway. The dealers just make higher gross profits. Customers will take the deal the dealers give them, and the discounts are small. Before the program, dealers would do anything to move a new vehicle. Discounts were massive.

In the past, auto makers would clear out old inventory of slow sellers with enough rebate to make customers buy. However, this time, the government decided to do that with our tax dollars, since they bailed out GM and Chrysler. I hope you all enjoyed buying your neighbor's new car (or feel good that your kids will). Hope that he can make the payments.

Regardless, after a big rebate, auto makers either accelerated the rebates of unwanted models or just eventually shut down the plants. Eventually, they either discontinued that model or redesigned it to customers' expectations.

Using government intervention like this just upsets the natural progression of the business. It is a nice short term blip for a beleaguered business, but as ususal these days, the taxpayers are on the hook. It is sad to know that our kids will foot the bill for our neighbors' new cars if we don't change our ways fast and hard.

Aug 04 09:25 AM

[fatseal:]

Wasn't the Cash for Clunkers a Billion dollars? And they've extended the program? How the heck are they out of money? I thought all they were giving out was $4500.00 per car? Did they sell a half a billion cars? No? Ok, so where'd the money go?

Aug 04 10:18 AM

[jkmac:]

Short sighted, short term, Washington never has, and never will implement and handle anything effectivly. Underlying problem remains & will not disappear with this bandaid.

Aug 04 10:54 AM

[Gem Hudson:]

J. Paul Getty business rule number one said. "Get into business for yourself." That way what you are producing. The customers have bought into their money worth and you have sold the very best that their money can buy.

But do they know their business? J. Paul Getty business rule number two said. "Get to know your business inside and out" and if not knowing what would sell for you, learning to know is going from their rags to their riches. How ever their business work for them. Work out the business.

But what price is their agenda. Congress paying the price for an Obama-mobile trade in is not such a great deal for their ear mark agenda.

Aug 04 11:00 AM

[jarco:]

The so called "new" models have virtually zero reliability or re-sale history. A pig in a poke perhaps?

Ford continues to have heavy debt but some positive vibes with consumers. GM and Chrysler have no debt and no creditability in the market place. Net result, huge potential gains for Hyundi followed by Toyota and Honda. Solid cars; good designs, reliability, financing leverage, and the list goes on. And all that bailout money to save union jobs down the tubes.

Aug 04 05:15 PM