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Auto Industry Seen Slowing in ’99

January 5, 1999

DETROIT (AP) _ A slightly slower economy and less money for incentives will likely send vehicle sales lower in 1999, economists for three of the largest automakers said Monday.

Nothing in their forecasts, however, pointed to a recession or deep dip in the number of customers looking to buy a new car or truck, they added.

``If you look at the economic health of the consumer, it’s very good,″ said Martin Zimmerman, executive director of corporate economics for Ford Motor Co. ``Confidence is high, and even though it’s down slightly in the past few months, it’s still strong.″

Zimmerman, G. Mustafa Mohatarem of General Motors Corp. and W. Van Bussmann of DaimlerChrysler AG estimated that automakers sold about 15.5 million cars and light trucks last year.

That’s higher than earlier estimates, and the three economists offered two reasons: Interest-rate cuts by the Federal Reserve kept car loans cheap, and an incentive war in the second half speeded up sales.

Bussmann said incentives on new vehicles were averaging $1,020 for the first half of 1998. But in the second half, General Motors increased its incentives to lure buyers back after two crippling strikes. Other automakers followed to some degree, raising the average incentive by $466.

``The incentive levels probably won’t continue to rise, unless people get crazy,″ Bussmann said.

The three economists expect next year’s light vehicle sales to total between 14.7 million and 15.2 million, assuming nothing serious rattles the U.S. economy. If the predictions come true, it could be the fifth consecutive year of sales over 15 million units.

``It will be an average year following a very good year,″ Bussman said.

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