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Will Car Sales Plunge Off the Fiscal Cliff?

Washington’s deadlock could kill auto industry momentum.

by on Dec.31, 2012

GM Chairman Dan Akerson: "quite concerned" about the fast-approaching fiscal cliff.

Preliminary estimates suggest December will be one of the best months the U.S. auto industry has seen in years, with sales up by as much as 15% year-over-year – but in the final hours of 2012 industry officials seem worried that the good times could be over all too soon.

As one of the most expensive items a consumer will buy – and as a discretionary purchase that usually can be postponed – analysts anticipate the auto industry will see a severe drop-off in demand if Washington lawmakers fail to meet the midnight deadline and send the U.S. economy hurtling over the so-called fiscal cliff.

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“We’re watching (the negotiations in Congress) very closely,” General Motors CEO Dan Akerson said this month, adding that he is “quite concerned” there won’t be a settlement in time to prevent a sharp rise in taxes for the average American – along with significant cuts in critical spending programs.