1. How bad are sales, really?
After edging up in May, sales dropped again in June below the 10 million–unit annual sales pace, which puts new vehicle sales at the slowest pace since the recession in 1958 — a downturn that forced some carmakers, notably Packard, to shut their doors for good. Meanwhile, each of the Big Six (the three domestic carmakers plus Toyota, Honda and Nissan, which together account for 75% of all vehicle sales in the U.S.) reported double-digit declines in sales. The declines ranged from 11% at Ford to nearly 42% at Chrysler. German automakers such as Volkswagen, BMW, Porsche and Mercedes-Benz also reported double-digit declines.
2. By how much will the new federal "Cash for Clunkers" program help stimulate sales?
Carmakers are hoping the program will add about 250,000 units to the industry's sales total in the next few months. However, the program, which offers rebates of $3,500 to $4,500 for consumers trading in older vehicles for new, more-efficient vehicles, won't get rolling until July 24, and its $1 billion in funding expires Sept. 30. Automakers are already lobbying for more cash. Germany sank $6 billion into a similar scrappage program, China put $4 billion into its equivalent of cash for clunkers, and Brazil put up $3 billion, notes Mark LaNeve, GM's vice president of sales, service and marketing.
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