Wednesday, January 23, 2008

Fed rate cut to boost auto sales: Chrysler CEO

By Jui Chakravorty Das | DETROIT (Reuters) - Chrysler Chief Executive Bob Nardelli said the Federal Reserve's emergency 75 basis point rate cut would help consumer confidence and boost auto sales in 2008.

"We are very pleased with the cut," Nardelli told reporters on the sidelines of the Automotive News World Congress on Tuesday. "It demonstrates a tremendous awareness that we need to improve some liquidity."

Earlier on Tuesday, the U.S. Federal Reserve cut interest rates by three-quarters of a percentage point to 3.5 percent in an effort to save the economy from a recession.

"For us, for the auto industry, it gives the auto financing companies the ability to really bring some more credit into the's going to help consumer confidence."

Nardelli, who has predicted industrywide sales of 15.5 million to 16 million vehicles for 2008, said the move could help U.S. auto sales climb above the 16 million mark this year.

"It could. That would be great," Nardelli said. "If it gets better...the auto industry will be very happy. It will give us some robustness, it will give us some wind in our sail to go through 2008.

U.S. auto sales fell for the second consecutive year in 2007, dragged down by a slowing economy, a slumping housing market and tighter credit markets that pinched less credit-worthy borrowers.

Full-year 2007 sales dropped almost 3 percent to 16.14 million vehicles, the lowest since 1998. Continued...

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