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Housing Downturn Affects Auto Sales

[Jun 16, 2007.]


The national housing slump is apparently having an effect on the nation's roadways.

Analysts are predicting a decrease in U.S. auto sales—and, believe it or not, a soft real estate market may be partly to blame. Lehman Brothers analyst Brian Johnson recently stated, "While in previous months, demand had proven more resilient than many forecasted, May is shaping up weaker for automotive sales in the U.S."

The housing downturn, coupled with a rapid rise in fuel costs, has apparently weakened consumer confidence, leading to a reduced demand for automobiles.

As Johnson stated, "Lower consumer confidence, associated in part with the slowdown in the housing market…seems to be taking now more of a toll on light vehicle sales."

Disappointing housing starts have dropped sales of high-margin pickup trucks, which are frequently purchased by contractors. Experts predict U.S. vehicle sales will run in the neighborhood of 15.9 million to 16 million vehicles in May, a decrease from last year's rate of 16.2 million vehicles.

General Motors' sales are expected to be down about three percent, although the Chrysler Group may see a growth of two to four percent in sales. Toyota is expected to lead the pack, with a sales increase of up to seven percent.

Detroit-based GM, Ford, and Chrysler lost a combined total of $15 billion in 2006. Much of the sales loss is being blamed on the fact that the big three automakers appear to be losing customers to Asian carmakers.

Troubling news in the auto industry is just part of the ripple effect of the national housing crisis. Many sectors of the economy are affected by sluggish home sales. Meanwhile, skyrocketing gasoline prices are only adding to the financial discomfort felt throughout the economy.

If housing starts happen to rebound and gasoline prices level out, car sales may improve once again.

Need auto finance? Apply today with Rebuild.org

Julie Ann Amos
June 16th 2007

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