Automotive Tea Leaves

Regardless of where in the world you live—or whether you follow the financial markets—you’d be hard-pressed to not be familiar with the recent implosion of the American sub-prime lending market. The repercussions have sent a shudder through the worldwide financial community and have caused pundits and fund managers to start bandying the dreaded R-word—recession. It’s, at times like this that, invariably, I start hearing whispered questions, “What do you think this will do to the car market?”

With the stock market having been so strong in recent years, it’s been some time since I have had to warm up the old Ouija board. The problem in this case is that the crystal ball looks fuzzy (maybe it’s just dusty!) and the tea leaves just look like a Rorschach test. While there may not be clear-cut answers, there is some suggestive data.