Detroit Automakers Brace for Government Shutdown's Impact

Thursday, 10 Oct 2013 07:59 AM

By John Morgan

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The federal government shutdown could force Detroit to delay the 2014 model year for some of its new vehicles, NBC News reported.

The reason is that furloughs of federal workers mean some agencies overseeing the auto industry have cut back or shuttered their operations.

They include field-crash tests by the National Highway Traffic Safety Administration and Environmental Protection Agency (EPA) determination of new-vehicle mileage ratings.

EPA mileage ratings are often set right before a vehicle model goes on sale, NBC said.

Editor’s Note:
5 Reasons Stocks Will Collapse . . .

“Without that sign-off, it’s unclear whether new 2014 products that have yet to get certification will be able to be sold. They might be forced to sit in showrooms indefinitely, if the federal shutdown drags on, with dealers unable to put those products on sale,” NBC reported.

The network reported that crash-testing delays could cause problems for electric-auto maker Tesla as an investigation proceeds into what caused a Tesla Model S car to catch fire in a widely covered recent incident in Seattle.

In the meantime, the shutdown has forced the government to put vehicle recalls on hold.

The result could be tragic if serious safety issues are unresolved for an extended period, NBC predicted.

M Live, a Michigan news site that covers the auto industry closely, said industry experts it contacted are still optimistic about the end of 2013 despite tepid sales in September and the government closure.

Jack Nerad, Kelley Blue Book executive editorial director and market analyst, told M Live, “If the shutdown is not resolved in the next several days it could have some effects in areas heavily populated by federal government workers, but the short-term effects won’t cause a ripple.”

Others, such as Ford Motor Co. senior economist Jenny Lin said it’s too soon to know if the shutdown will impact the U.S. auto industry.

Patrick George, a columnist for Jalopnik.com, a site that follows the auto industry, wrote,
“If your paycheck is tied to the federal government, it's pretty clear that you probably won't be pulling the trigger on a new car until you start getting paid regularly again. I'd be very curious to see the shutdown's impact on auto sales in the D.C./Virginia/Maryland region.”

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

Related Stories:

Former Bush Speechwriter: GOP 'Wasted Ammunition' on Shutdown

Political Costs of Shutdown Worry Both Parties

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