US auto dealers to suffer great losses soon

The next five months or so will be difficult ones for U.S. auto dealers, with sales expected to slump, but the chief economist for the National Automobile Dealers Association expects a bit of a rebound in the second half of the year.

Photo: US auto dealers to suffer great losses soon

US auto dealers to suffer great losses soon

Still, economist Paul Taylor predicts U.S. car and light truck sales will drop to about 15.7 million for the full year. That's down about 2.5 percent from the 16.1 million vehicles sold in 2007, the worst year in a decade, and down 1.3 million vehicles from the 17 million sold as recently as 2005.

At the NADA's annual convention in San Francisco, Taylor predicted slow economic growth and weak sales during the first half of the year, with unemployment and credit problems lingering.

"Energy costs of gasoline, home heating and cooling will continue to drain money from consumer budgets and slow down consumer spending," he said Sunday.

Other economists and industry analysts have predicted U.S. sales as low as 15.5 million, while some automakers have predicted up to 16 million.

Taylor said the economy could slip into a recession if the Commerce Department revises fourth-quarter 2007 gross domestic product growth downward from the anemic 0.6 percent it reported last month. Two more revisions of fourth quarter statistics are possible, and if the first quarter of this year is also negative, that would mean a recession, Taylor said.

"We think the first quarter of this year is going to be the weakest quarter," he said in an interview with The Associated Press.

The National Automobile Dealers Association was founded in 1917 by a group of dealers determined to lower the luxury tax on automobiles from 5% to 3% by lobbying congress in Washington D.C. After the success in Washington, the group decided to form a permanent union and represent the nation's 15,000 automobile dealers. In July of 1917, 130 dealers met in Chicago where they elected George Browne of Milwaukee to be NADA's first president. In 1975 NADA constructed a new corporate headquarters in McLean, Virginia where they currently reside at 8400 Westpark Drive McLean, Virginia 22102.

According to the Center for Responsive Politics, from 1990 to 2006, NADA donated a total of $21,167,642 to political campaigns 31% of which went to Democratic candidates while 69% went to Republican candidates.