Senate will OK

The U.S. Senate will approve a $2 billion extension of the cash for clunkers auto sales incentive by week's end, Majority Leader Harry Reid said on Tuesday, giving new life to a successful program that has boosted industry sales to a 2009 high.

Reid told reporters after a White House meeting between Senate Democrats and President Barack Obama that there was enough support in the chamber to give the measure final congressional approval.

We'll pass 'cash for clunkers,' Reid said. Before we leave here. The Senate recesses this Friday.

The schedule for a vote was not clear and Republicans may want to debate the matter, which could push consideration to later in the week.

The House of Representatives approved the extension last Friday.

Federally backed rebates of up to $4,500 to consumers who trade in old, gas-guzzling vehicles and buy new, fuel-efficient ones are credited with the boost in U.S. sales in July.

The year through June has been a disaster with recession and consumer credit woes driving sales sharply lower and helping to push General Motors Corp and Chrysler Group into bankruptcy.

Ford Motor Co outperformed the overall market in July and appeared to best its U.S. rivals in clunker sales that industrywide favored smaller cars over sport utilities and pickups, according to government statistics.

Barclays Capital analyst Brian Johnson suggests the fast start of the clunker initiative and strong prospects for extended funding could accelerate automaker plans for production increases.

The White House has said the timetable for Senate action this week would have to be met or the clunker program would cease.

A senior administration official cast a more confident note on Tuesday despite fears among thousands of dealers that the extension would be blocked or slowed by Senate procedure.

This program is moving forward, Transportation Secretary Ray LaHood said at a news conference.

Senate Minority Leader Mitch McConnell raised the prospect of possible amendments but a Republican leadership aide said it did not appear the votes were there to change the bill. Any alteration to the House-passed measure would delay the extension until September, when lawmakers return from vacation.

The House left town July 31.

Separately, Transportation Department figures showed sales nearing 160,000 vehicles in connection with clunker trade-ins, representing more than $450 million in federal vouchers, since July 1.Dealers in Michigan, where U.S. automakers and many suppliers are based and reeling economically due to industry hardships, reported $34.4 million in clunker sales, the highest for any state.

The National Automobile Dealers Association and the government believe once a backlog is cleared in tallying sales, the initial $1 billion for clunker rebates will have been nearly exhausted.

Overseas manufacturers captured six of the top-10 sales spots. All but one were cars rather than trucks or SUVs.

Toyota Motor Corp had three, the Prius, Camry and Corolla, among the leaders, while Honda Motor Co Ltd had two, the Civic and Fit. Both are Japanese companies. South Korea's Hyundai Motor Co Ltd weighed in with the Elantra.

Ford, the only U.S. manufacturer not to seek federal bailouts and not to restructure in bankruptcy, had two models in the top 10, the Escape, a small sport utility vehicle, and the clunker sales leader, the Focus.

Chrysler Group LLC cracked the list with the Dodge Caliber at No. 8 and the Cobalt made by General Motors Co was tenth.

(Reporting by John Crawley and Richard Cowan; Additional reporting by Thomas Ferraro and Jeff Mason in Washington and Kevin Krolicki in Detroit, editing by Gerald E. McCormick and Carol Bishopric)