Auto sales suffer with U.S. housing woes

Reuters reported U.S. auto sales are expected to have slipped about five per cent in August, hurt by a weakening housing market, higher gasoline prices and mushrooming consumer debt, but helped by incentive programs.

Analysts said sales in August would have fallen further if the war on incentives had not heated up, and several forecasts expect sales for all of 2007 to fall to their lowest level in nine years.

U.S. auto sales, one of the leading indicators of consumer spending, began slowing in the second quarter and the knock-on effects of a weakening housing market and relatively high gas prices are widely expected to have capped demand in August.

“Early in August, sales were dismal. To generate showroom traffic, most automakers introduced incentives programs midway through the month,” said Jesse Toprak, executive director at industry research firm Edmunds. “That effort was relatively successful, but the uncertainty in the housing market is likely to continue suppressing consumer demand for new vehicles for some time.”