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Tide Moves Out on Cash for Clunker Benefits

October 1st, 2009 Michael McDonough

Domestic vehicle sales plunged in September to 6.7mn (SAAR) units from 10.1mn in August after the expiration of the US government’s Cash for Clunkers program.  This was the lowest reading since April.  Car sales dropped by 3.3mn units, or nearly 40%, from August, while truck sales declined by 3.4mn units.  Ford displayed the best performance of the major domestic auto companies with sales declining by only 5%, compared to GM & Chrysler, which both lost over 40%.  Overall,  sales declined by roughly 20% factoring in both domestic and foreign company auto sales. These results were much worse than the Bloomberg consensus estimate.  Nevertheless, auto companies remain optimistic that September’s weakness will only be temporary as demand gradually returns to the sector into 4Q09.  There was one bright spot in the report, sales for Hyundai climbed 27% on the back of incentives and the company’s reputation of providing reliable cars at a reasonable price.

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