Many people believe a U.S. attack against Iraq is inevitable, but the auto industry believes any war will have little economic impact, according to sources interviewed by the Automotive News.
The auto industry trade publication interviewed several sources earlier this week during the National Automobile Dealers Association (NADA) convention in San Francisco.
The chief economist with market research firm J.D. Power and Associates is among those who believe a war with Iraq will have little economic impact.
Van Bussmann told Automotive News that “whatever sales damage is done in the first half of the year would be undone in the second half.”
Bussmann is forecasting auto sales of 16.4 million units this year, a decline of 2%, or 400,000 units, from 2002.
Ken Gillman, CEO of Asbury Automotive Group of Stamford, Conn., said a war will create “the CNN factor,” meaning consumers will be glued to their TVs, thus reducing dealership lot traffic.
“If it’s a short war, you (retailers) won’t notice it,” Gillman said. “If it is longer, it’s anybody’s guess.”
One dealer from Mississippi compared the current retail environment with that of a hurricane spinning off the Gulf Coast.
“When they (hurricanes) come in the gulf and just sit there and spin, and we don’t know what direction their going, people quit buying anything,” said Dub Herring Jr., the auto dealer from Mississippi. “We’re experiencing exactly the same situation. Business has been slow and I don’t think people are going to move off dead center until something happens.”
Meanwhile, Nissan North American Inc. is planning on selling 100,000 additional units this year, war or no war, according to the Automotive News.
However, Jed Connelly, Nissan’s senior vice president of sales and marketing, agrees that a long war that harms consumer confidence would have a negative impact on sales volume.
“The trick will be responding to the market, avoiding the trap of inventory gluts that require profit-eroding rebates,” Connelly said.