Automakers cut yearly sales forecasts

Even before Wall Street's latest stomach-churning ride, automakers in Detroit were bracing for a tough year.

By June, vehicle sales were on track to end the year at a nine-year low as high gas prices, dropping home values and economic uncertainty dampened demand.

Now, with panic spreading in the financial markets and Wall Street's Dow index giving back most of its gains for the year, auto executives worry that investors' losses and rising interest rates might seriously spook consumers.

"We're in some very choppy water right now," Ford Motor Co. market analyst George Pipas said Thursday.

"It would be wrong to characterize our view as panicky, but we are very watchful, and monitoring the developments in the credit markets, particularly as they relate to consumers," he said.

Chrysler LLC Chief Executive Robert Nardelli told reporters Thursday that the U.S. Federal Reserve should cut interest rates to prevent a spending slowdown.

"Sooner would be better than later," Nardelli said at an event marking the 10th anniversary of Chrysler's Prowler roadster.

On Thursday, Deutsche Bank auto analyst Rod Lache cut his forecast for U.S. auto sales to 16 million, from 16.2 million units, citing weak housing and high borrowing costs.

And he does not expect demand to recover quickly. "While we may be close to the trough levels in U.S. auto demand, we do not believe the U.S. industry will rebound to trend-level demand over the short term," Lache wrote in a research note. More at Detroit News