CHICAGO: The popular "Cash for Clunkers" incentive helped kickstart the US auto market in July, with Ford leading the way by registering its first increase in sales for almost two years.

Total sales hit a seasonally adjusted annualized rate of 11.24 million vehicles in July, the first time this year that figure has risen above the depressed rate of 10 million, according to industry researcher Autodata.

"It's obviously working quite well," White House spokesman Robert Gibbs said of the government-funded "Cash for Clunkers" program which pays consumers up to 4,500 dollars to trade in a gasoline-guzzler for a more fuel efficient vehicle.

The initiative burned through one billion dollars in its first week and the US House of Representatives voted Friday to pump in another two billion.

But the effort has hit resistance in the senate, prompting President Barack Obama invited senators to attend a White House lunch on Tuesday in an effort to push through the funding before legislators break for their summer holidays on Friday.

The auto industry, still reeling from a collapse in sales last fall which helped contribute to the bankruptcies of both General Motors and Chrysler, says it can sorely use the help.

While the "Cash for Clunkers" program boosted auto sales by as much as 200,000 vehicles in a single week, overall industry sales remain at levels not seen since the recession of the early 1980s.

July's sales of 1.14 million vehicles were 12.2 percent lower than a year earlier and overall sales are down 32.1 percent for the year to date, according to Autodata.

General Motors estimates that 5.5 million vehicles could qualify as trade-ins under the program, but cautioned it could take months to burn through another two billion dollars in funding.

"You'll start running out of the available number of people with eligible vehicles and the wherewithal to buy," GM sales analyst Mike DiGiovanni said.

The incentive has helped release pent-up demand in the market and "came at a very good time to help boost the economy," said DiGiovanni, who estimated extra sales and production could boost third quarter GDP by 0.5 percentage points.

GM said it posted its highest US retail sales in 10 months, even as total sales fell 19.4 percent to 155,569 vehicles. Its market share fell to 18.8 percent from 20.4 percent in July 2008, according to Autodata.

Ford Motor Co. was the clear winner in July, posting its first monthly sales increase since November 2007 and seeing its share of the US market rise to 15.9 percent from 13.7 a year earlier.

"Cash for clunkers put us over the top," said George Pipas, Ford's manager of sales analysis.

Ford said retail sales at its core brands -- Ford, Lincoln and Mercury -- rose nine percent to 118,197 vehicles. Total sales, including Volvo and low-margin fleet sales, rose 2.3 percent to 165,279.

Hyundai extended months of gains as sales rose 11.9 percent to 45,553 and its share improved by a full point to 4.6 percent.

Toyota Motor's sales fell 11.4 percent to 174,872, but the Japanese car-maker said sales hit a new monthly high for the year as a result of "Cash for Clunkers."

"Beyond the tangible economic stimulus, the positive environmental benefits of the CARS program is clear to see," said Toyota Motor Sales USA president Jim Lentz.

Toyota estimates it managed to "save customers an estimated eight million gallons of gas and 20 million dollars in gas spending over the next year" as a result of just seven days of sales related to the incentive program.

Chrysler's July sales fell nine percent to 88,900 vehicles after low-margin sales to fleet customers took a major hit after its factories were closed while it restructured under bankruptcy protection.

Chrysler said retail sales were up 52 percent and it had managed to reduce its inventories to a 40 day supply thanks to the program.

Honda saw its share slip to 11.5 percent from 12.2 percent as sales fell 17.3 percent to 114,690 vehicles, while Nissan's fell to 7.2 percent from 8.4 percent with sales falling 24.6 percent to 71,847 vehicles.