AutoNation says 2007 sales outlook uncertain

By Kevin Krolicki

DETROIT (Reuters) - Higher interest rates and a slackening housing market have clouded the outlook for U.S. auto sales next year despite a planned blitz of new models, the chief executive of leading dealer group AutoNation Inc. (AN.N: Quote, Profile, Research, Stock Buzz) said on Tuesday.

"It's going to be more difficult over the next six to nine months," AutoNation Chief Executive Mike Jackson said at the Reuters Autos Summit in Detroit.

He added: "We're in a transition period. I don't know whether we're going to have a hard landing or a soft landing, but I know enough to know we're in a transition."

Sales of cars and light trucks in the U.S. market are down about 4 percent as of August. Stripping out sales by the car makers to commercial fleet operators, including rental companies, sales are down about 8 percent, Jackson said.

Jackson said that while overall sales in 2006 would be lower than the 16.9 million units recorded in 2005, the final tally could be close to that mark.

"I still think that for the industry there's enough momentum in the marketplace that for this year it will break through 16.5 (million) and probably be 16.7 (million), 16.8 (million), something like that," he said.

Auto sales, which represent a major share of overall consumer spending, are watched closely as an indicator of the strength of household demand for durable goods.

AutoNation, the largest U.S. auto dealership group and the largest retailer of vehicles from General Motors Corp. (GM.N: Quote, Profile, Research, Stock Buzz), Ford Motor Co. (F.N: Quote, Profile, Research, Stock Buzz) and Chrysler Group DCXGn.DEDCX.N, has already seen signs that the housing slowdown is crimping demand, even among wealthier buyers of luxury cars, Jackson said.  Continued...