Falling stock prices, a slowdown in the housing market and tighter credit could lead do a decline in auto sales, but there has yet to be a major impact.
In an interview yesterday, Bob Lutz, GM’s vice chairman and head of product development, said, “It is never good when the stock market goes down. It takes wealth out of the economy…people feel poorer and decide to defer major purchases.” But Lutz sees the downturn as only a “momentary correction” for the “prosperity due to sub-prime mortgages and a building boom that was unjustified.” GM felt the hit to the sub-prime mortgage market through GMAC, its former financial division. GM still owns 49% of GMAC.
But even with the market in a downturn, Lutz said GM sales over the last two weeks have outpaced expectations, thanks to an increase in incentives, according to Automotive News. GM’s U.S. sales were down 19% in July, which Lutz attributed to higher incentives offered by competitors, especially on the Toyota Tundra .
Chrysler ’s CEO, Bob Nardelli, is calling for the Federal Reserve Bank to cut the prime interest rate to help the economy and the auto industry, reports Automotive News, and said that “sooner is better than later.”
