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03 March 2024

Auto execs watch for signs US downturn spreading

By Agencies


Major automakers, already facing flat or declining sales in the United States, Japan and Europe, are keeping close watch for any signs that an economic slowdown in the United States has begun to spread, executives said at the Geneva auto show this week.

Car sales worldwide are expected to reach a record for the seventh consecutive year in 2008 because of rapid growth in developing markets like China, India and Russia. That expectation could change should the US slowdown spread, executives said.

"So far so good, but very much a topic we are watching very, very closely," General Motors Corp Chief Executive Rick Wagoner told reporters.

"If we begin to see a significant downturn in China, which we don't expect, to see that on top of US weakness, then that would be news," Wagoner said. "We are headed to a seventh year in a row of global record automotive sales, and something like that would cause you to step back and rethink it."

Chrysler LLC Vice Chairman and President Jim Press, whom Chrysler hired away from Toyota Motor Corp last year, said that while global economies are connected, he had not seen signs of the weakness spreading from the United States.

"I think it is not that kind of a severe recession that is really going to be a drag on other economies. It is more of a localized flu that we will get through in the United States," Press said.

Press said 2008 would be "character-building" for the US auto industry.

"I think the automobile industry has been in a recession and we are probably halfway down the bathtub toward the other end," Press said.

Other executives said there are still areas of Europe that remain a concern even without signs of a direct impact from the slump in US growth.

Ford Motor Co expects industry sales to be relatively flat in Europe overall in 2008, with rapid growth in developing markets offsetting possible declines in the developed Western Europe markets, said John Fleming, president of Ford Europe.

"We are worried about the Western European economy," Fleming said. "We are worried about interest rates, exchange rates, a general softening in some countries -- but as some soften, some strengthen."

For GM Europe, those potential areas of concern have included Spain and the UK, with Russia adding rapid growth, GM Europe President Carl-Peter Forster said.

"It might not be a super year, but it doesn't look too bad," Forster said. (Reuters)