Analysts: U.S. auto sales outlook hinges on end to political strife
Jeff Schuster: "If there is one deadlock after another going forward, it will have a negative influence on auto sales."
DETROIT -- Nothing is more likely to stall U.S. auto sales this year than continued political wrangling.
That was the conclusion of a panel of economists and forecasters at a Society of Automotive Analysts conference here Sunday evening before the Detroit auto show.
"The Jan. 1 fiscal cliff was a hurdle we cleared," said Jeff Schuster, executive director of LMC Automotive. "There was consumer resilience on that. But if there is one deadlock after another going forward, it will have a negative influence on auto sales."
Bob Schulz, managing director of financial rating agency Standard & Poor's, quipped "We've got the government on negative outlook."
"So far consumer confidence hasn't run for cover," he said. "But with continued deadlocks on fiscal policy, consumer confidence could be compromised."
Ellen Hughes-Cromwick, chief economist for Ford Motor Co., said consumers are driving the auto sales recovery, but repeated partisan clashes over government spending, revenue and debt undermining public resolve.
"U.S. businesses can see their way through uncertainty," but that's harder for consumers to do, she said. "And [even Ford] can't forecast a debt-ceiling resolution."
Itay Michaeli, vice president of Citi Investment Research and Analysis, warned, "If we are ever going to get back to selling 17 million vehicles a year, it depends on younger consumers buying their first car" and not just depending on older consumers.
"And making that first buy takes lots of confidence," he added. "And that's the group that government wrangling is most likely to disrupt."
Speaking on the sidelines of the SAA conference, analyst Jessica Caldwell of Edmunds.com, said consumers are still buying, but the fiscal cliff debate did slow sales in late December, which Edmunds monitors in real time through its network of dealers.
"We were forecasting a strong selling rate, and then thinking it was going to be higher," she said. "But when fiscal cliff coverage started dominating news coverage the last few days of the month, we saw sales slow to a crawl."
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