US car sales return to the doldrums after Washington’s cash-for-clunkers deal ends

Seen from the outside, July and August US car sales could have looked like a clear sign the industry was coming out of tough times at light speed. However, the engine behind the record-setting 700,000 sales was not the economy, but rather Obama’s cash-for-clunkers programme that provided an incentive of $4,500 for each old car traded in on a new one. The logic was sound: the US car industry would get a shot in the arm with new sales, while the old, energy-inefficient cars would be replaced with modern, less-polluting versions. There was only one problem: it cost lots of money. The programme had to be shot down after $2 billion was spent in record time. With the foot off the pedal, Chrysler’s sales slumped 42% from a year ago, Toyota's 16% and Ford’s 6% last month. If there are headlights in the tunnel, it’s Ford’s announcement that sales of its F-series rose for two months running. Intriguingly this could signal an improvement in the housing market. Though generally awful, the F-series is popular with building contractors nationwide. In 2009 so far, total industry sales are down 28% on last year.