As the government standoff drags on, anxious consumers will hold on off big ticket items, putting the breaks on the automobile industry and the related exchange traded fund.
John Krafcik, chief executive officer of Hyundai Motor Co. U.S. sales unit, estimates that the damaged consumer confidence and growing anxiety could drag down October new-vehicle sales by as much as 10%, reports Alan Ohnsman for Bloomberg.
Other automakers, including General Motors (GM) and Ford Motors (NYSE: F), have also voiced concerns over the potential threat of a prolonged government shutdown.
“It’s that anxiety that keeps customers, potential buyers, on the sidelines when making a big purchase like an automobile,” Krafcik said in the article. “We’ll probably see the industry off five to 10 percent this month, compared to where it was in September. I think a lot of it has to do with this shutdown discussion.”
The U.S. shutdown has left government agencies closed and federal workers on furlough. Federal workers affected by the shutdown are asking about deferring loans and lease payments as the standoff continues.
“We have already had requests from over a thousand people to have their payments deferred,” Krafcik added. “That’s a much stronger uptake than we thought. It makes us happy. It means we’re making a difference, but it does give an indication of just how deep and serious the issues are.”
U.S. car sales have been recovering, but sales slipped 4.2% in September, the first decline in over two years, due to the way the calendar pushed Labor Day promotions into August results.
For more information on the car industry, visit our automobiles category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
- Automotive Industry
- government shutdown