Struggling Auto Makers Fear Effects of Cooling Housing Market

Soaring energy prices and their collective drag on U.S. automobile sales are in the rearview mirror — at least for now.

But the nation’s cooling housing market — and its potential to keep car buyers out of dealer showrooms — has left auto manufacturers leery as they try to lure end-of-year buyers with another round of bargains.

According to the Stamford Times, major automakers reported U.S. sales rose a modest 2.9 percent in November to nearly 1.2 million, from a relatively weak November 2005.

“The economy is definitely pushing back against the industry,” said Global Insight analyst George Magliano. “Housing is hurting it.”

The potential problems that continued weakness in the home mortgage market could pose to the auto industry was a running theme in conference calls with top-selling General Motors Corp. and Ford Motor Co.

Paul Ballew, GM’s chief of global market and industry analysis, said that after seeing sales hurt earlier in the year by soaring gasoline prices and rising mortgage rates, automakers remain attentive to the possible effect that the cooling housing market could have on car buyers.

“The industry itself in some regards has gone through a mini recession in 2006,” Ballew told analysts and reporters. “We’re not pleased by that, but those are events outside of our control.”

But Jesse Toprak, chief economist for Edmunds.com, a research site for car buyers, said it would take a more dramatic and long-term downturn in home sales to show up significantly in U.S. auto sales.

Ford sales analyst George Pipas said the market could hold down the industry’s sales in 2007, because if fewer people can afford home loans, chances are the same will be true of car loans, which most need to finance autos.

Analysts differ on whether or not that such a decline will happen, but if you’re a consumer, especially in previously-sizzling markets, conditions have shifted in your favor and it’s definitely the time to buy.