Auto sales hurt by housing slump

March 17, 2007 at 10:53 AM
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FORT LAUDERDALE, Fla., March 17 (UPI) -- The sagging housing market is putting the hurt on auto sales across the United States, the Detroit Free Press reported Saturday.

Mike Jackson of AutoNation Inc. in Fort Lauderdale, Fla., said prospective car buyers' concern about home values is a phenomena he's never encountered before.

"They're reluctant to make a big purchase if they don't know what their house is worth, even if they don't want to sell it," said Jackson, whose company owns 280 new-car franchises across the country. "They don't know how it's going to come out."

UCLA Economics Professor Edward E. Leamer said low interest rates in recent years enticed people to buy homes and cars sooner than may have been prudent. Now homes aren't appreciating enough to give consumers a cushion and that is putting a crimp on auto purchases, he said.

"I think it's going to be a tough year for housing," Leamer said, "and it's a tough story for autos."

Auto purchases are down 8.5 percent this year for General Motors, Ford and DaimlerChrysler.

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