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Carmakers Project Continued Stong Sales in 2003 - 2003-02-23

Despite a weak January, faltering U.S. economy, and concerns about possible war with Iraq, strong sales of new cars and light trucks in America are expected to continue.

Auto industry numbers crunchers are largely in agreement that this year's sales figures will be good, if not a record-breaker.

"We believe that U.S. auto sales will be around 16.2 million in the 2003 calendar year, said George Pipas, U.S. sales analysis manager for Ford Motor Company. "And that is a little lower than the 16.8 million new cars and light trucks that were sold in 2002."

Paul Taylor, chief economist with the National Automobile Dealers Association (NADA), a group of 20,000 new car and truck retailers predicts sales of 16.3-16.5 million units.

"It will be the fifth-best [auto sales] year in the history of our nation and it follows on the heels of the four best years in the history of our nation," Mr. Taylor said.

In the face of so many uncertainties, Ford's George Pipas explained why he believes the market is so strong for new vehicles: "Low interest rates and growing household incomes and manufacturers that are battling for market share."

NADA's Paul Taylor says another reason is the large customer incentives from vehicle manufacturers. "The incentives have been very important to maintaining high levels of sales. And, again, the 41-year low in interest rates, combined with overall very good economic productivity growth in the economy, means households are utilizing low interest rates and also have the advantages of wage gains," he said.

Customer incentives include manufacturer-subsidized no-interest loans, cash rebates, and equipment upgrades.

The big question mark in all this is: Possible war with Iraq. Mr. Taylor says his prediction already has the effects of a war built in to the sales range. Ford's George Pipas was reluctant to go out on a limb.

"The range of outcomes is pretty broad. So, it is difficult to say," he said.

But barring a long and costly war, automakers are looking forward to another good year.