US auto sales in Sept slump post-'clunkers'

U.S. auto sales likely fell in September back to the nearly three-decade lows of early 2009 without government incentives to spur buying, leaving in doubt the timing and pace of a recovery for the battered industry.

Nearly 700,000 new cars and trucks were bought by U.S. customers through the government "cash for clunkers" incentive program from late July through the first three weeks of August, a leap from recession-stunted sales earlier in 2009.

The massive jump in buying versus earlier in 2009 depleted the stores for all the major auto manufacturers, leaving industry inventories at historically low levels.

Major automakers made sharp production cuts due to the economic downturn in general. Chrysler, now under management control of Italy's Fiat SpA, and GM, also broadly halted output around their restructurings in bankruptcy.

The exhaustion of the government incentive program and a dearth of key vehicles at dealerships curtailed activity at many dealerships through the first half of September, but there
have been some signs of sales improving late in the month.

"We have started to get little rumblings that maybe the consumer isn't quite so flat on their back, that they have been responding to some of the incentive programs and the fact that leasing is coming back," said Rebecca Lindland, an automotive research director at IHS Global Insight.

Lindland said the General Motors Co 60-day return guarantee program has attracted consumer attention, Chrysler's return to leasing earlier in September should provide support and other automakers have brought back some incentives.