Published: Thursday, 6 Aug 2009 | 8:49 PM ET

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The U.S. Senate approved and sent to the White House on Thursday a $2 billion extension of the "cash for clunkers" autos sales incentive program.

The measure, approved by 60 to 37, extends the surprisingly successful program that has raised sales of the U.S. auto industry.

The initial $1 billion of funding approved in June for "clunker" business has generated more than $920 million in rebates and more than 220,000 in auto sales.

Supported by the incentive program, U.S. auto sales overall were down about 12 percent in July from a year earlier, but it was their best performance this year.

The program offers consumers a federally backed rebate of up to $4,500 if they trade in old vehicles for new, more fuel efficient ones.

The House of Representatives approved the extension on July 31, and President Barack Obama is expected to quickly sign it.

Supporters of the extension defeated several Republican amendments aimed at derailing the plan in the Senate.

Citing government data, dealers said on Thursday more than $920 million in 'clunker' rebates have fueled nearly 220,000 vehicle sales since July 1.

Domestic and overseas manufacturers have so far split the 'clunker' market. More fuel efficient passenger cars have outsold sport utilities, pickups and vans.

The administration had warned the 'clunker' measure would be suspended if Congress did not approve more money by week's end. The House of Representatives passed the $2 billion extension July 31.

"Passage of the legislation in the Senate assures there will be no suspension," said Bailey Wood, director of legislative affairs for the National Automobile Dealers Association.

But future demand is an open question, although Wood said current showroom traffic remains strong with non 'clunker' sales up as well.

Barclays Capital analyst Brian Johnson expects the 'clunker'-related lift in the industry's annual sales rate and production in the second-half of the year to continue.

Detroit and overseas automakers that make at least some of their vehicles in the United States have been quiet on production increases. Ford Chief Financial Officer Lewis Booth said the company would study its inventories and potential production changes this week. Booth said nothing would be announced until September.

GM is also trying match inventory with demand.

"We'll have to take a hard look at adjusting our production if cash-for-clunkers gets another infusion," said GM spokesman Greg Martin.

Toyota is already stepping up some production in North America, but ramping it up for the popular Prius hybrid, one of the top-sellers under the 'clunker' program, would be difficult to do quickly, the company said.

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Economists see the 'clunker' program boosting third-quarter growth, and several firms including Goldman Sachs have recently raised their GDP forecasts. Goldman now sees third-quarter growth at a 3 percent annualized rate, up from its earlier forecast for just 1 percent, in part because the clunkers program has helped revive auto manufacturing.

Still, the lift is likely to be short-lived. The incentives may have pulled forward auto demand from later quarters, leaving the economy vulnerable to a setback.

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